Solvay closes Rhodia deal
BELGIAN chemicals group Solvay is betting on emerging markets exposure and speciality chemicals with a €3.4bn (£3bn) cash bid for French group Rhodia.
Yesterday’s deal ends Solvay’s search for a takeover after it sold its drugs unit to US partner Abbott Laboratories in September 2009 for €4.5bn.
The offer of €31.60 per share for Rhodia, which has been recommended by Rhodia’s board of directors, means Solvay will still have cash left over from its drugs unit sale.
The deal will significantly lift Solvay’s exposure to emerging markets, increasing its percentage of sales from fast-growing economies to 40 per cent. Rhodia is particularly strong in China and Brazil and nearly 50 per cent of its sales came from high-growth regions in 2010.
It will also enable Solvay to tap into higher-margin speciality chemicals, a fertile area for M&A in the chemicals sector as some firms shift away from traditional low-margin bulk chemicals production.
ING analyst Fabian Smeets said Rhodia, which makes engineering plastics, was probably the cheapest stock in the European chemicals sector.