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Solvay to Separate into Two Independent Companies
03/15/2022


Global resin and chemical manufacturer Solvay announced this week that it is reviewing plans to split the company into two independent publicly traded companies that will enhance strategic focus and optimize growth opportunities to build a foundation for the future.

The company outlined its plans for the two independent companies referred to as EssentialCo, and SpecialtyCo, which will separate Solvay's chemicals business and its specialty and solutions business.

EssentialCo would comprise leading mono-technology businesses including soda ash, peroxides, silica and coatis, which are reported as Solvay's chemicals segment, as well as the specialty chemicals business, which generated approximately EUR 4.1 billion ($4.5 billion) in net sales in 2021. The business would provide technologies for end markets that include building, consumer goods, and automotive sectors.

As an independent company, Solvay added that EssentialCo would be positioned to further reinforce its leadership through expansion and consolidation opportunities, including accelerating growth in natural soda ash and sodium bicarbonate, pursuing growth in the Asia-Pacific region and further extending its position in a consolidating peroxide market. The new company is also expected to play a key role in accelerating the energy transition that began in its soda ash business in order to be carbon neutral before 2050.

Meanwhile, SpecialtyCo would comprise the company's materials segment, including its specialty polymers, its high-performance composites business, and the majority of its solutions segment, including Novecare, Technology Solutions, Aroma Performance, and Oil & Gas, which combined, generated approximately EUR 6.0 billion ($6.6 billion) in net sales in 2021.

Under the separation plan, each company would have a tailored capital structure that best supports its value creation objectives. Solvay noted that SpecialtyCo would be committed to a strong investment-grade rating and have full financial flexibility at the time of separation to fund its growth plan, and EssentialCo would maintain a prudent financial policy to support cash generation.

The transaction, expected to be completed in the second half of 2023, is subject to general market conditions and customary closing conditions, including final approval by Solvay's Board of Directors, consent of certain financing providers and shareholder approval at an extraordinary general meeting.

The composition of the Boards and management teams, as well as naming for each company, will be provided at a later date.

By Brian Balboa for The Plastics Exchange.


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