FUNDAMENTAL STRATEGIC CHANGE FOR SOLVAY: SIGNATURE OF FINAL CONTRACTS WITH BP
Solvay has signed a binding agreement with BP, which represents a leap forward in its ongoing strategic repositioning towards fast growth and high added value in specialty products.
Following the Memorandum of Understanding of December 2000, the final agreement now states the financial terms of the transaction:
Solvay is acquiring BP's engineering polymers business. This acquisition, including the leading Sulfone Polymers and Amodel® businesses, will increase by 50% Solvay sales in the high-margin Specialty Polymers sector. Total turnover in this fast-growing market will reach approximately EUR 900 million (33% of the plastics sector).
SOLVAY and BP are setting up two joint ventures in high density polyethylene (HDPE), which together will be one of the leading players worldwide, with a total turnover of approx. EUR 2.0 billion. In Europe, the two companies would combine their high-density polyethylene (HDPE) businesses into a 50-50 joint venture. In the United States, Solvay will contribute its HDPE assets to a separate JV, of which Solvay will hold 51% and BP the remaining 49%.
Solvay is divesting to BP its polypropylene (PP) activities where it was not amongst the global leaders (ranked 12th with annual sales of EUR 500 million).
Besides the acquisition of the Specialty Polymers and the divestiture of PP, the deal generates for Solvay a.o. an up front cash payment of EUR 80 million from BP and strengthens the HDPE business through security of ethylene supply.
The joint venture agreements also define the conditions of exercise of puts and calls between both parties over their interests in the joint ventures.
The clearance of the US authorities being already obtained, the deal will be shortly submitted to the European Authorities as well as to other national authorities. Subject to these approvals the companies expect the closing to be effective end of September.
Aloïs Michielsen, Chief Executive Officer of Solvay, said " This complex deal is extremely important and a cornerstone in Solvay's strategic development path. The Group is substantially increasing its focus on achieving superior growth in Pharmaceuticals and Specialties and reducing its exposure to petrochemical cyclicality. Moreover, with this deal, 85% of Solvay sales will come from markets where the Group holds a leading position , among the top 3 worldwide."
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