Solvay Buys Rhodia In EUR3.4B Cash Deal

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By Elena Berton

Of DOW JONES NEWSWIRES

PARIS (Dow Jones)--Belgian chemicals and plastics company Solvay S.A. (SOLB.BT) Monday said it will buy Rhodia S.A. (RHA.FR), in a deal valuing the French specialty chemicals maker at EUR3.4 billion.

Solvay said it's offering EUR31.60 for each Rhodia share in cash as part of a friendly deal, representing a premium of 50% on Rhodia's closing price of EUR21.07 Friday.

Solvay said the acquisition of Rhodia will be earnings accretive from 2011, with annual cost synergies of EUR250 million expected within three years.

"We see the possibility of doubling our (earnings) to almost EUR2 billion and creating a major global chemicals platform under the banner of Solvay," Solvay Chief Executive Christian Jourquin said in a statement, referring to rebitda, or recurring earnings before interest and taxes, depreciation and amortization.

-By Elena Berton, Dow Jones Newswires; +33 1 40 17 17 65; elena.berton@dowjones.com

(Adds details and share price in 2nd to 4th and background in 7th to 8th paragraphs.)

By Elena Berton 
   Of DOW JONES NEWSWIRES 
 

PARIS (Dow Jones)--Belgian chemicals and plastics company Solvay S.A. (SOLB.BT) Monday said it will buy Rhodia S.A. (RHA.FR), in a friendly deal valuing the French specialty chemicals maker at EUR3.4 billion that will expand its footprint in fast-growing emerging markets.

Solvay, which in 2009 sold its pharmaceuticals business to Abbott Laboratories (ABT) for EUR4.5 billion, is offering EUR31.60 a share in cash, representing a premium of 50% on Rhodia's closing price of EUR21.07 Friday. The deal has been recommended by the directors of the French company.

Rhodia shares opened 50% higher in Paris, and were trading 49.4% higher at EUR31.46 at 0831 GMT, outperforming the SBF 120 index and in line with the offer price, while Solvay was trading 3.4% at EUR86.72 in Brussels.

The new company will have combined annual revenue of EUR12 billion and will derive 40% of its sales from emerging markets.

Solvay said the acquisition of Rhodia, due to close in late August, will be earnings accretive from 2011, with annual cost synergies of EUR250 million expected within three years, which will be achieved through the reduction of external costs and without major downsizing plans.

"We see the possibility of doubling our (earnings) to almost EUR2 billion and creating a major global chemicals platform under the banner of Solvay," Solvay Chief Executive Christian Jourquin said in a statement, referring to rebitda, or recurring earnings before interest and taxes, depreciation and amortization.

Rhodia Chief Executive Jean-Pierre Clamadieu will become deputy chief executive of Solvay and is expected to take the helm of the company once Jourquin retires.

Credit Suisse group (CS) and BNP Paribas S.A. (BNP.FR) advised Rhodia.

Based near Paris, Rhodia was the chemicals unit of French chemical and pharmaceutical concern Rhone-Poulenc until 1998, when it was spun off from its parent.

It develops specialty chemicals and new technologies for clients in the automotive, electronics, pharmaceuticals, agrochemicals, consumer care and tire industries, having reported revenues of EUR5.23 billion and net profit of EUR259 million in 2010.

-By Elena Berton, Dow Jones Newswires; +33 1 40 17 17 65; elena.berton@dowjones.com