Belgium's Solvay To Acquire Cytec For $5.5 Bln In Cash; Stock Down

(RTTNews) - Belgian chemicals company Solvay S.A. (SVYSY.PK, SVYSF.PK) announced Wednesday that it has entered into a definitive merger agreement to acquire U.S.-based specialty materials and chemicals company Cytec Industries Inc. (CYT) for $75.25 per share in cash. The total cash consideration will amount to $5.5 billion, corresponding to an enterprise value of $6.4 billion. Solvay shares are currently trading around 4 percent lower in Belgium.

Solvay said the acquisition of Cytec will be accretive to its adjusted earnings per share after the first year and to Cash Flow Return on Investment in the mid-term. With the deal, Solvay targets annual pre-tax synergies at more than 100 million euros, to be substantially realized within three years.

New Jersey-based Cytec, with 4,600 employees, generated sales of $2 billion and a 20 percent REBITDA margin in 2014. The company sources almost half of its sales from North America, nearly a third from EMEA and the remainder from Asia Pacific and Latin America.

According to Solvay, the deal price per share represents a premium of 28.9 percent compared to the closing price of Cytec on July 28 and a premium of 26.9 percent compared to average closing share price over the last three months.

Both companies' Board of Directors have unanimously recommended the deal. The Board of Solvac, Solvay's main shareholder, has unanimously confirmed its support for the deal and intention to vote in favor of the capital increase. It plans to exercise its rights as part of the capital increase to maintain its 30 percent stake in Solvay's shareholding structure.

The acquisition is expected to close in the fourth quarter, subject to customary closing conditions.

According to Solvay, the deal would propel it to world's second largest player in aerospace composite materials, and also accelerates growth of Advanced Materials with major push into composites.

Following the deal, Cytec's composites businesses will be integrated into Solvay's Advanced Materials operating segment. Its mining chemicals as well as its niche additives and phosphine specialty chemical businesses will become part of Solvay's Advanced Formulations segment.

Jean-Pierre Clamadieu, CEO of Solvay, said, "The proposed acquisition of Cytec marks a major step change in Solvay's portfolio upgrade. It is a unique opportunity for Solvay to boost its customer offerings in lightweighting with advanced materials in aerospace and automotive, as well as to strengthen its know-how with activities in mining chemicals."

Solvay said it has arranged committed bridge financing for the deal which it plans to fund with a 1.5 billion euros rights issue, 1.0 billion euros of additional hybrid instruments and a senior debt issuance.

Solvay will convene, in due course, an extraordinary general meeting of its shareholders to vote on the proposed rights issue.

In Belgium, Solvay shares were losing 3.63 percent to trade at 123.35 euros.