Solvay and Ineos to Create New Enterprise Inovyn
Solvay S.A., Brussels, Belgium, has signed a definitive agreement with Ineos to create a strong player in chlorovinyls, to be named Inovyn. The joint venture is expected to be effective by year-end following the divestments required by the European Commission. Until completion, Solvay and Ineos will continue to run their businesses separately.
"Thanks to this agreement we now have a unique opportunity to create a world- class competitive player with high-quality assets and substantial synergies, better able to withstand the challenging environment in Europe," said Jean-Pierre Clamadieu, CEO of Solvay. "This is another key step in the transformation of Solvay's business profile."
The terms of the joint venture agreement have been simplified and adjusted to the remedies as well as challenging market conditions. Solvay will receive an upfront payment of EUR 175 million at closing and transfer liabilities worth EUR 250 million into the joint venture. It will exit Inovyn after three years, when Solvay will receive additional cash proceeds targeted at EUR 250 million. These final cash proceeds at exit will be adjusted based on the joint venture's average REBITDA performance during its three-year period, with a minimum exit payment of EUR 75 million.
To be headquartered in London, Inovyn will have proforma 2013 sales of more than EUR 3 billion, with 14 sites in eight European countries. Governance will be split equally between the partners. From Ineos Chris Tane will be appointed as Inovyn's Chief Executive Officer, Mike Maher as Chief Financial Officer and Julie Taylorson as Procurement Director. From Solvay, Filipe Constant will be named as Inovyn's Commercial Director, Jean-Michel Mesland as Operations Director and Otto Grolig as General Counsel.
Solvay and Ineos's project, announced last year, obtained European competition clearance in May subject to the implementation of remedies. These include the divestment of certain Ineos-owned assets in Tessenderlo (Belgium), Mazingarbe (France), Beek (The Netherlands), Wilhemshaven (Germany) and Runcorn (UK).
Solvay will contribute to Inovyn its vinyl activities, which are part of SolVin, as well as its Chlor Chemicals business, in seven fully integrated production sites in Europe. These sites include five electrolysis units converted into more energy-efficient membrane technology, supporting the sustainable production of PVC.
Kerling, the subsidiary of Ineos and Europe's largest PVC producer, will contribute its chlorvinyls and related businesses that include three modern and large-scale membrane electrolysis units. These assets are based on six sites in four European countries.
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