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Solvay’s proposed acquisition of Rhodia sets the stage for more chemical M&A

April 05/2011

(ICIS) -- Belgium-based Solvay’s proposed acquisition of France’s Rhodia for EUR 3.4bn (USD 4.9bn) sets the stage for more chemical mergers and acquisitions (M&A), analysts said on Monday. Solvay’s planned acquisition of Rhodia comes after US investment vehicle Berkshire Hathaway announced its USD 9bn (excluding the assumption of about USD 700m in debt) acquisition of US-based lubricants and specialty chemicals firm Lubrizol on 14 March.

As Jefferies & Co. analyst Laurence Alexander noted in a research note, 32% of Rhodia’s sales are from products that address sustainable development, including lightweight plastics for the automotive sector, and silica for environmentally-friendly tyres. Including the assumption of EUR 3.2bn in Rhodia debt, the deal is valued at EUR 6.6bn.

Rhodia generates around 20% of its sales from the automotive end market and around 40% of its sales from emerging markets.

“The main product within Rhodia’s portfolio is engineering plastics based on polyamide or Nylon 6,6 - from which the company generates around 40% of its revenues,” the analyst said.

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