Solvay and Ineos: Joint Venture
Solvay SA, Brussels, Belgium, and Ineos Group AG, Rolle, Switzerland, have signed a Letter of Intent (LOI) to combine their European chlorvinyls activities in a proposed 50-50 joint venture. The combination would form a polyvinyl chloride (PVC) producer ranking among the top three worldwide. It would build on the strengths of both companies’ industrial assets, the skills of our teams and the complementarity of our geographical presence in order to enhance competitiveness.
The joint venture would have pro-forma net sales of EUR 4.3 billion and Rebitda of EUR 257 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, which is the third most-used plastic in the world, caustic soda and chlorine derivatives. RusVinyl, Solvay’s Russian joint venture in chlorvinyls with Sibur, is excluded from the transaction.
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 LOI 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 EUR 250 million upon completion of the transaction.
The proposed transaction is subject to the applicable information/consultation procedures with employee representatives in the countries involved.
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