By Gabriele Steinhauser
BRUSSELS--Belgium-based chemicals company Solvay SA on Wednesday
said it is buying U.S. counterpart Cytec Industries Inc. for $5.5
billion in a bid to become a major player in the production of
light-weight materials for airplanes and high-end cars.
Solvay said it would pay $75.25 a share for Cytec and finance
the deal by raising EUR1.5 billion ($1.66 billion) of capital and
issuing EUR1 billion of hybrid instruments and senior debt.
The company said the acquisition would make it one of the
leading companies in the market for composite materials for
airplanes and should enable it to take advantage of the growing use
of such materials in high-end cars. It should also help boost
Solvay's business producing chemicals for the mining sector.
"For us, it's making a big entry into aerospace," said Solvay
Chief Executive Jean-Pierre Clamadieu.
Cytec produces lightweight composite materials for Airbus's A350
and the Boeing 787, where they help reduce the planes' overall
weight and improve fuel efficiency, Mr. Clamadieu said. Solvay
expects annual growth of around 10% for such materials in the
aerospace sector, he added.
Lightweight composites are also used in high-end cars such as
Ferraris and Lamborghinis. Mr. Clamadieu said the use of these
materials should increase in other high-end cars that are produced
in bigger numbers, although growth predictions on that end are more
uncertain.
"What we've paid for is really the growth in aerospace," he
said.
Cytec is based in New Jersey, has 4,600 employees and generated
revenue of $2 billion last year, mostly in North America and the
Europe, Middle East and Africa region.
Mr. Clamadieu said around $1 billion of Cytec's sales came from
aerospace.
Solvay said the per-share purchase price is 29% above Cytec's
closing share price Tuesday and that the deal had been recommended
unanimously by both companies' boards of directors.
Cytec's CEO Shane Fleming welcomed the deal. Solvay's "strategic
focus is perfectly aligned with our businesses, while the
technology synergies with their specialty polymers and formulations
expertise should accelerate our growth," he said.
Solvay said it expected the deal to close in the fourth
quarter.
News of the deal came as Solvay said it swung to a net profit of
EUR143 million in the second quarter, compared with a EUR292
million loss a year earlier. The year-earlier result had been hit
by an impairment charge on Solvay's discontinued European
Chlorovinyls business.
Write to Gabriele Steinhauser at
gabriele.steinhauser@wsj.com
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