Published on : Jul 31, 2015
Solvay, the Belgian-based chemical group will acquire Cytec, the U.S. chemical company, in an attempt to strengthen its business in lightweight composites for cars and planes. The acquisition deal worth US$5.5. billion, would boost Solvay’s mining chemical business. North America is the Belgian chemical manufacturer’s largest market and contributes to annual sales worth US$2.0 billion. Cytec has around 4,600 employees across the globe. The company manufactures composite and adhesive materials for the automotive and aerospace industries. The chemical maker also produces reagent chemicals used in the mining sector for solvent extraction and mineral processing.
In a statement, Solvay has mentioned that it would pay US$75.25 per share for Cytec in cash. Post the announcement of the acquisition deal, the U.S. chemical company’s share price closed at US$58.39 on Tuesday this week. Solvay said that the enterprise value was US$6.4 billion, inclusive of debt. Through this merger, the Belgian firm expects to save100 million euros annually within the next three years. Solvay hopes that Cytec would add to its earning per share after the first year of acquisition.
According to Jean-Pierre Clamadieu, the CEO of Solvay, the decision to acquire Cytec was the next significant step for Solvay to expand its business. As Cytec is the second largest supplier of advanced material to aerospace sector, acquisition of the U.S. chemical manufacturer will help Solvay to get a stronghold in the sector. However, industry analysts have raised questions regarding the high price of the deal. But Clamadieu is positive that the deal is worth the money for Solvay to capitalize on the significant growth opportunities at Solvay. Solvay’s second quarter results have showed core profit for one-off items increasing by 8.1 percent.