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Solvay to Create with Rhodia a Major Player in Chemicals


Solvay will launch a friendly cash offer for Rhodia at €31.60 per share

Solvay and Rhodia announced the signing of 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 €31.60 per share (ex dividend of €0.5 per share) values the equity of Rhodia at €3.4 billion and the enterprise value at €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 April 1, 2011 and a premium of 44% compared to the average closing share price over the last three months. The transaction has been recommended unanimously by the board of directors of Rhodia.

Solvay is headquartered in Brussels and employs about 16,800 people in 40 countries. In 2010, its consolidated sales amounted to €7.1 billion. Rhodia employs around 14,000 people worldwide and generated sales of €5.23 billion in 2010. Solvay will fully finance the transaction with its cash resources and its financial structure will continue to be conservative and solid.

The creation of a new group will accelerate the shared ambition to create a large global chemical company committed to sustainable development.

The new group's strategy is based on the following strengths: 90% of its combined sales of €12 billion are realized in businesses where it is already among the top three worldwide. Solvay is a leader in high performance specialty polymers, in soda ash and hydrogen peroxide, while Rhodia holds leadership positions in specialty materials (silica, rare earths), products for consumer markets (surfactants, natural polymers, acetate tow) and engineering plastics based on polyamide 6.6.

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.

Beyond the revenue synergies, the annual cost synergies are estimated to amount to €250 million within three years. The cost synergies are expected to result from the alignment of cost structures in line with good industry practices used in groups of a comparable size. Two-thirds of these synergies will come from external cost optimization. Therefore, no major downsizing is planned in the context of this combination.

To facilitate a smooth and rapid integration of the two groups, Jean-Pierre Clamadieu, chairman and CEO of Rhodia, will join Solvay’s Executive Committee in the role of deputy CEO once the offer is closed. Mr. Clamadieu is also intended to succeed Solvay’s current CEO Christian Jourquin upon his retirement. In this context, Mr. Clamadieu will be proposed for appointment to the board of directors of Solvay at the AGM in May 2012. In addition, Gilles Auffret, COO of Rhodia, will be appointed CEO of Rhodia and member of the Executive Committee of Solvay.

“We are very proud to announce this proposed friendly business combination. We have a shared vision in that we want to create a new group to achieve our goal of sustainable growth and development in chemistry,” said Mr. Jourquin. “We see the possibility of doubling our REBITDA to almost €2 billion and creating a major global chemicals platform under the banner of Solvay. I am convinced that this project based on the complimentary strengths of our forces will be supported by the employees of both groups. We look forward to jointly developing innovative solutions to some of the greatest challenges facing humanity in the 21st century.”

“The project presented today is a fantastic opportunity for Rhodia, for its employees and its shareholders. By joining Solvay, we will accelerate the overall development of our business, capitalizing on a strong financial structure, our leadership positions, and an exceptional geographic footprint. More importantly, I feel that the similar cultures of the two groups will ensure a successful integration resulting in one strong and ambitious group,” said Mr. Clamadieu.