Belgium’s Solvay to buy US Cytec for $5.5 billion

Belgian chemicals giant Solvay said Wednesday it will pay $5.5 billion for US firm Cytec, aiming to be a key player in the fast-moving air and space composite materials market.

Solvay said the acquisition would make it the world’s second-largest company for aerospace composite materials and would reinforce its advanced materials and advanced formulations platforms, which produce chemicals used in the aerospace, automotive and mining sectors.

It said the acquisition would allow it to achieve annual synergies of over $110 million.

New Jersey-based Cytec, with 4,600 employees, generated sales of $2 billion and a 20 percent REBITDA margin in 2014.

Solvay said the purchase of Cytec is going to be accretive to its settled incomes per share in the first year or after first year and the currency will be converted to investment within 6 months. Future plan is to work out for its rights as the portion of increase in capital to regulate its 30 percent stake in Solvay’s shareholding structure. The deal is expected to secure regulatory approval on both sides of the Atlantic and should be finalized in the fourth quarter of 2015. The panel of Solvac and most prominent shareholder has mutually confirmed their association and support for the deal.

Solvay shares were down 0.66 per cent in early trade on the Belgian stock market after a gain of some 3.0 per cent on Tuesday.

Solvay has bridge financing for the transaction, and it plans a 1.5 billion-euro rights issue.

Following the deal, Cytec’s composites businesses will be integrated into Solvay’s Advanced Materials operating segment.