Solvay and Ineos pool together PVC activities in Europe

Solvay and Ineos are combining their European chlorvinyls activities in a proposed 50-50 joint venture, to form what they say will be a PVC producer ranking among the top three worldwide. It would build on the strengths of both the companies’ industrial assets, teams and geographical presence in order to enhance competitiveness. The joint venture would have pro-forma net sales of EUR4.3 billion and REBITDA of EUR257 million, based on 2012 figures. The combined business would have around 5,650 employees in 9 countries and would pool each company’s assets across the entire chlorvinyls chain. This includes PVC, caustic soda and chlorine derivatives. RusVinyl, Solvay’s Russian joint venture in chlorvinyls with Sibur, is excluded from the transaction.

This transaction is expected to substantially change Solvay’s portfolio of activities and allow it to accelerate Solvay’s transformation into a chemical group focused on growth and high-margin Businesses, it said.

The joint venture would generate significant synergies thanks to: shared best practices that improve production processes, particularly to optimise energy consumption; streamlined product mix and increased specialisation of plants; optimised raw material and energy purchases and usage; reduced logistics and transport costs; and combined marketing and sales forces.

Solvay would contribute its vinyl activities, which are part of Solvin, as well as its Chlor Chemicals business, spread across seven fully integrated production sites in Europe. These sites include five electrolysis units converted into more energy efficient membrane technology, which supports sustainable production of PVC.

Kerling, the subsidiary of Ineos and the largest PVC producer in Europe, would contribute its chlorvinyls and related businesses that include three modern and large-scale membrane electrolysis units. These assets are based on ten sites in seven European countries.

The Letter of Intent (LOL) provides exit mechanisms under which Ineos would acquire Solvay’s 50% interest in the joint venture for a value based on a mid-cycle REBITDA multiple of 5.5x. The exit arrangements would have to be exercised between four and six years from the joint venture’s formation, after which Ineos would be the sole owner of the business. Solvay would be entitled to receive upfront cash payments of EUR250 million upon completion of the transaction.


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