Belgium's UCB buys Solutia's resins, additives & adhesives business for $500m

03 December 2002 09:53  [Source: ICIS news]

LONDON (CNI)--Belgian specialty chemicals and pharmaceuticals group UCB has bought the resins, additives and adhesives business of debt-laden US chemicals company Solutia for $500m (Euro503m) plus a $10m exclusivity fee.

UCB said Tuesday that it will combine the Solutia business with its chemicals and films activities to create a new surface specialties sector, which will have about 4700 employees and a turnover of more than Euro1.5bn.

It said the acquisition, which is expected to close early next year - subject to regulatory approval, is a logical step in reinforcing UCB's position in surface technologies and will help generate excess cash to fund growth in both chemicals and, especially, pharmaceuticals.

The activities being taken over from Solutia generated an operating profit of Euro27m last year on a turnover of Euro638m. They cover liquid coating resins (including waterborne and high solids), technical resins, additives and adhesives. Described by UCB as remarkably complementary to the Belgian company's specialties operations, the Solutia activities are mainly geared towards high-end industrial coating applications, with a particular focus on metal and automotive.

Solutia's resins, additives and adhesives activities comprise 10 production sites, with the largest being in Germany and Austria. There are also four research and development (R&D) sites and the overall business employs about 1700 people.

UCB's chemicals sector made an operating profit of Euro34m last year on a turnover of Euro469m. It employs about 1200 people and has eight production sites, with the largest at Drogenbos in Belgium and North Augusta in the US.

The company's films sector is one of the world's largest specialty BOPP (bi-axially oriented polypropylene) films producers and the world's largest cellulose films manufacturer. Last year it recorded an operating profit of Euro20m on a turnover of Euro396m. It has five production sites, with the largest at Wigton in the UK, one R&D site and employs about 1800 people.

UCB said its planned new surface specialties business will be headed by Ben Van Assche, current director-general of the chemical sector.

The new surface specialties business will, claimed UCB, be a world-class player with strong positions in high-end resins and films. It will also be well represented globally, with 62% of revenues coming from Europe, 27% from the Americas and 11% from Asia Pacific.

Georges Jacobs, UCB's chief executive, said: "By reaching this agreement, UCB has captured a unique opportunity to combine two highly complementary businesses and to make good use of part of its available cash."

Jacobs added that it will allow UCB to pursue a clear growth strategy in both surface specialties and pharma. However, he stressed that the pharmaceuticals sector, which is by far the main contributor to UCB’s results, will clearly remain the primary development axis within the group.

He said pharmaceuticals growth will be pursued both organically and by acquisitions. "We expect that the new surface specialties business, by reaching a critical mass and being self-supporting, will generate excess cash that can be used to seize new growth opportunities, more specifically in pharma."

By: Neil Sinclair
+44 20 8652 3214

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