Solvay, BP finalise hdPE merger and PP/eng polymers swap

06 August 2001 11:30  [Source: ICIS news]

LONDON (CNI)--Belgian chemicals company Solvay said Monday it has finalised plans to swap its polypropylene (PP) business with BP's engineering polymers business and for the two companies to merge their high density polyethylene (hdPE) activities.

Under the deal, which has now been signed, BP will pay Solvay an upfront cash payment of Euro80m ($71m).

Alois Michielsen, Solvay's chief executive officer, described the transaction as "a cornerstone in Solvay's strategic development path". The company plans to focus on growing its pharmaceuticals and specialties activities and reduce its exposure to petrochemicals cyclicality, he said.

"With this deal, 85% of Solvay's sales will come from markets where the group holds a leading position - among the top three worldwide," he added.

Solvay recorded an 18% fall in earnings before interest and tax (EBIT) to Euro311m for the first half of 2001, mainly as a result of a sharp earnings decline in the plastics division.

Under the new agreement, Solvay said the hdPE business will be strengthened through security of ethylene supply. Solvay and BP will form two hdPE joint ventures: a 50:50 venture in Europe and a 51:49 venture in the US.

By: Anna Jagger
+1 713 525 2653

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