Today’s announcement that Solvay has bid for Rhodia – if successful – will put it into a strong global position in high performance specialty polymers, soda ash and hydrogen peroxide, specialty materials (silica, rare earths), products for consumer markets (surfactants, natural polymers, acetate tow) and engineering plastics based on polyamide 6.6.
Solvay has been sitting on a huge pile of cash since it sold its pharma business and we have been waiting for a large move like this to happen. We had speculated that Arkema might be a target. Rhodia CEO Jean Pierre Clamadieu has done an excellent job in turning the company from what some saw as a bit of a “basket case” into a strong performer which is attractive enough to attract this bid.
Clamadieu has also done well for himself personally, becoming CEO of the merged companies after Christian Jourquin retires.
Solvay and Rhodia yesterday signed a framework agreement according to which Solvay will launch a friendly cash Offer for 100% of the share capital of Rhodia. The cash Offer at E31.60 per share (ex dividend of EUR 0.5 per share) values the equity of Rhodia at EUR 3.4 billion and the enterprise value at EUR 6.6 billion, representing a REBITDA multiple of 7.3x.
The Offer represents a premium of 50% compared to the closing price of Rhodia on the 1st of April 2011 and a premium of 44% compared to the average closing share price over the last three months. The Offer will be launched in France and extended to the United States of America. The transaction has been recommended unanimously by the board of directors of Rhodia.
According to the companies, future geographic expansion will be driven by a significant presence in the emerging markets, which already generate 40% of sales of the combined group. The complementary nature of the industrial activities of Rhodia and Solvay should provide the combined group with a balanced presence in its different market segments: specialty chemicals for consumer goods, construction, automotive, energy, water, environment, and electronics.