Solvay to unlock value by exploring a separation into two
independent publicly listed companies
Solvay to unlock value by exploring a separation
into two independent publicly listed companies
Designed to sharpen strategic focus, optimize
growth opportunities, and build the foundation for the
future
SpecialtyCo to be a pure play specialty leader
with accelerated growth potential
EssentialCo to be an essential chemicals leader
with resilient cash generation
Conference call to be held on March 15, 2022 at
10:00am CET to outline the contemplated transaction
Brussels - March 15, 2022, 7:30am CET
Solvay (“the Company”) today announced it is reviewing plans to
separate the Company into two independent publicly traded
companies:
- EssentialCo would comprise
leading mono-technology businesses including Soda Ash, Peroxides,
Silica and Coatis, which are reported as the Company’s Chemicals
segment, as well as the Special Chem business. These
businesses generated approximately €4.1 bn in net sales in
2021.
- SpecialtyCo would comprise
the Company’s currently reported Materials segment, including its
high-growth, high-margin Specialty Polymers, its high-performance
Composites business, as well as the majority of its Solutions
segment, including Novecare, Technology Solutions, Aroma
Performance, and Oil & Gas. These businesses combined generated
approximately €6.0 bn in net sales in 2021.
“The plan to separate into two leading companies represents a
pivotal moment in our journey to transform and simplify Solvay,”
said Ilham Kadri, chief executive officer, Solvay. “Since we first
launched our G.R.O.W. strategy in 2019, we have taken a number of
actions to strengthen our financial and operational
performance, focus our portfolio on higher growth and higher
margin businesses, and reinforce our business purpose across the
organization. We have changed the culture profoundly, with a
passion for performance and meritocracy at its core. Our
successful focus on cash, costs, and returns has strengthened the
Materials and Solutions segments to be more self-sustaining and
profitable. At the same time, the Chemicals segment has
continued its strong track record of resilient cash generation.
Notwithstanding the challenges of the current global
environment, we are confident that pursuing this plan would enable
us to create compelling value for shareholders over the
long-term.”
“Our talented and dedicated employees have worked hard to
transform Solvay, and their efforts have enabled us to take this
important next step towards the creation of two strong companies,”
continued Kadri. “We expect to create opportunities in each
company for our employees to thrive and grow, and we are confident
that both companies will maintain the same levels of customer focus
and commitment to value creation.”
"Today's news is an important milestone for Solvay,” said
Nicolas Boël, Chairman of Solvay Board of Directors. “In the last
decade, Solvay has undergone major evolutions and the
transformation has accelerated under Ilham’s leadership with a
focus on profitable growth and simplifying the Company, all while
driving innovation and raising the bar in sustainability. This
exciting announcement marks the next phase of the transformation.
On behalf of the entire Board, we look forward to guiding Solvay’s
next chapter of sustainable value creation for shareholders,
customers and employees.”
Benefits of the Separation
Upon completion, the separation would establish two strong
industry leaders that would benefit from the strategic and
financial flexibility to focus on their distinctive business
models, market and stakeholder priorities. Following the
separation, each standalone company would be positioned to:
- Intensify focus on its strategy
and growth opportunities;
- Prioritize resources to meet its
unique business needs;
- Apply differentiated operating
models to better serve its customers;
- Pursue distinct capital
structures and capital allocation priorities;
- Drive sustainability initiatives,
including reaching carbon neutrality before 2040 for SpecialtyCo,
and before 2050 for EssentialCo;
- Attract and retain talent best
suited for distinct businesses; and
- Provide a clear investment thesis
and visibility to attract a long-term investor base suited to each
company.
EssentialCo – An Essential Chemicals Leader with Resilient
Cash Generation
EssentialCo would provide technologies that have proven
essential across a number of attractive and resilient end markets
(including building, consumer goods, automotive) and benefit from a
foundation of strong leadership positions. As an independent
company, 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 leadership in a consolidating peroxide market.
It would also play a key role in accelerating the energy transition
that began in its soda ash business in order to be carbon neutral
before 2050. Following the separation, EssentialCo would strengthen
its operating model by enhancing its cost leadership and maximizing
cash generation.
SpecialtyCo – A Pure-play Specialty Leader with Accelerated
Growth Potential
As an independent company, SpecialtyCo would provide innovative,
value-added solutions that support a more sustainable world,
driving above market growth and strong returns. SpecialtyCo would
be comprised of two business segments:
- Materials: The
Materials segment is an industry leader in advanced materials,
focused on bringing new solutions to customers that address
critical performance and environmental challenges. Materials has
the broadest portfolio of unique, patented materials based on
high-performance polymer and carbon fiber composite technologies,
with leading global positions in all core markets. These
businesses have a strong track record of above market growth,
supported by underlying megatrends including electrification,
lightweighting, sustainable mobility, and digitalization.
With a focus on innovation, a robust commercial engine, and unique
understanding of its customer base, Materials would be positioned
to drive continued penetration of its sustainable solutions to help
customers disrupt their industries (transportation, electronics,
healthcare). The segment would benefit from increased investments
in capacity, innovation, and commercial capabilities to
support above market organic growth at superior returns and
industry-leading margins.
- Consumer &
Resources: The Consumer & Resources segment primarily
consists of businesses within Solvay’s current Solutions segment
and would be a market leader in providing specialty ingredients
focused on more natural and sustainable solutions by anticipating
rapidly evolving customer needs. With a proven, asset-light
business model that is supported by underlying megatrends including
eco-friendly ingredients and resource efficiency, the segment is
well positioned to drive the consumer industry toward biobased,
natural and circular solutions, leveraging its portfolio of
innovative solutions and application expertise. The segment
would be positioned to drive above market growth at strong
returns.
Proposed Transaction Overview
Each company would have a tailored capital structure that best
supports its value creation objectives. SpecialtyCo would be
committed to a strong investment-grade rating. The company
would have full financial flexibility at the time of separation to
fund its growth plan. EssentialCo would maintain a prudent
financial policy to support cash generation. The current
investment grade rating of Solvay SA is intended to be preserved
until the separation. Solvay SA is committed to offer current USD
and EUR senior and hybrid bondholders the option to be transferred
to SpecialtyCo in due time. The dividend at the outset is
intended to be aligned with Solvay’s current level.
Under the separation plan, Solvay’s shareholders would retain
their current shares of Solvay stock, which will continue to
be listed on Euronext Brussels and Euronext Paris. The
separation would be effected by means of a partial demerger of
Solvay whereby the specialty businesses will be spun off to
SpecialtyCo. Solvay shareholders at the time of separation would
receive shares in SpecialtyCo pro rata to their shareholding in
Solvay SA. The shares of each company would be expected to be
listed on Euronext Brussels and Euronext Paris. The company expects
to structure the separation in a manner that would be tax efficient
for a significant majority of shareholders in key
jurisdictions.
The composition of the Boards and management teams, as well as
naming for each company, will be provided at a later date.
The transaction 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, and is
expected to be completed in the second half of 2023. The
Board of Directors of Solvac, Solvay’s long-standing reference
shareholder, has confirmed its support of Solvay’s transaction.
Solvay envisages updating investors on the strategies for
SpecialtyCo and EssentialCo prior to the completion of the
separation.
Advisors
Morgan Stanley and BNP Paribas are serving as financial advisors
for the transaction, with Cleary Gottlieb Steen & Hamilton and
Linklaters acting as legal advisors.
Investor Conference Call
The Company plans to hold an investor call to discuss this
announcement and provide an opportunity for Q&A on March 15 at
10:00am (CET). The call will be hosted by Ilham Kadri and Karim
Hajjar and will be accessible on Solvay’s website. A slide
presentation will be posted online 30 minutes before the call
starts.
Safe harbor
This is a public announcement by Solvay SA/NV pursuant to
Article 17(1) of Regulation (EU) No. 596/2014 of April 16, 2014, as
amended.
The planned organizational design for SpecialtyCo and
EssentialCo remains subject to a number of analyses, conditions,
consultations and approvals. There can be no assurance regarding
the ultimate timing of the contemplated separation or that the
separation will actually be completed.
The contemplated separation and related reorganization
transactions remain subject to review and decision by the Board of
Directors, consent by certain financing providers and final
decision by the shareholders’ meeting. The Company will keep the
market informed if and when appropriate.
Certain statements contained herein may be forward-looking
statements including, but not limited to, the statements about the
potential separation of the Company into EssentialCo and
SpecialtyCo, as well as other statements that are predictions of or
indicate plans, strategies, goals, future events or intentions.
Undue reliance should not be placed on such statements because, by
their nature, they are subject to known and unknown risks,
uncertainties and assumptions. Should one or more of these risks
and uncertainties materialize, or should any underlying assumptions
prove incorrect or any other factor impact those statements, the
Company’s and the Solvay Group’s actual results, plans and
objectives, including, without limitation, the timing and
consummation of the transactions described herein, may differ
materially from those expressed or implied in the forward looking
statements. The inclusion of such statements should not be regarded
as a representation that such results, plans or objectives will be
achieved. Important factors that could cause actual results, plans
and objectives to differ materially from those expressed in such
statements include, among others, the Company’s ability to satisfy
the necessary conditions to consummate the contemplated separation,
or that such separation will be completed, within the expected time
frame, on the expected terms or at all; the Company’s ability to
realize the anticipated benefits of the potential separation, in
full or at all; the expected tax treatment of the potential
separation; potential uncertainty during the pendency of the
contemplated separation that could affect the Company’s financial
performance; the possibility of disruption, including changes to
existing business relationships, disputes, litigation or
unanticipated costs in connection with the contemplated separation
and related transactions; uncertainty of EssentialCo’s and
SpecialtyCo’s financial performance and ability to succeed as
standalone publicly traded companies following completion of the
separation; negative effects of the announcement or pendency of the
separation and related transactions on the market price of the
Company’s securities and/or on its financial performance; general
economic factors, such as interest rate, currency exchange rate
fluctuations and changing market conditions; competition, including
technological advances, new products and patents attained by
competitors; challenges inherent in new product research and
development; the impact of business combinations, divestitures and
restructurings, including any reorganizations to be carried out in
connection with the contemplated transaction; adverse litigation or
government action, including related to product liability claims;
changes to applicable laws and regulations, including tax laws and
import/export and trade laws; the impact of products withdrawals;
regulatory approval processes; all-in scenario of R&I projects.
The Company undertakes no obligation to publicly update or revise
any of these forward-looking statements, whether to reflect new
information, future events or circumstances or otherwise, except as
required by applicable laws and regulations.
This press release is for informational purposes only and is not
intended to and does not constitute an offer or invitation to sell
or solicitation of an offer to subscribe for or buy, or an
invitation to purchase or subscribe for, any securities of the
Company, EssentialCo or SpecialtyCo, any part of the business or
assets described herein, or any other interests or the solicitation
of any vote or approval in any jurisdiction in connection with the
transactions described herein or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. This press release should not be
construed in any manner as a recommendation to any reader
thereof.
This press release is not a prospectus, product disclosure
statement or other offering document for the purposes of Regulation
(EU) 2017/1129 of June 14, 2017 (as amended, the “Prospectus
Regulation”), and the contemplated distribution of SpecialtyCo
shares is expected to be carried out in circumstances that do not
constitute “an offer to the public” within the meaning of the
Prospectus Regulation.
The distribution of this press release may be restricted
by law in certain jurisdictions and persons into whose possession
any document or other information referred to herein comes, should
inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
- 20220315-Powerof2 release-ENG
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