Solvay to create with Rhodia a major player in chemicals

Solvay will launch a friendly cash Offer for Rhodia at EUR 31.60 per share

06-Apr-2011 - Belgium

Solvay and Rhodia announce 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 EUR 31.60 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.

The acquisition of Rhodia will be earnings accretive from the first year. 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 will capitalize on its large geographic footprint, the quality and balance of its portfolio, its industrial excellence and the solidity of its financial base to fully capture new growth opportunities, especially in high-growth markets.

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 EUR 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. Jean-Pierre Clamadieu is also intended to succeed Solvay's current CEO Christian Jourquin upon his retirement. In this context Jean-Pierre 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.

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