Belgian chemical group Solvay will buy US peer Cytec for USD 5.5 billion to boost its presence in lightweight composites for planes and cars and reinforce its mining chemicals business.
Cytec, which makes most of its sales in North America, has 4,600 employees worldwide and annual sales of about USD 2.0 billion.
It makes composite and adhesive materials for the aerospace and automotive industries and reagent chemicals used in the mining sector for mineral processing and solvent extraction.
Solvay said in a statement on Wednesday it would pay USD 75.25 per share for Cytec in cash, which closed at USD 58.39 on Tuesday.
The Belgian company said the enterprise value, which includes debt, was USD 6.4 billion, representing a 2015 estimated
core profit (EBITDA) multiple of 14.7 times and of 11.7 times when considering potential synergies.
Solvay expects to make annual savings of 100 million euros within three years of the merger and added that Cytec would add to its earnings per share after the first year.
The Belgian group will finance the transaction with a 1.5 billion euros (USD 1.66 billion) rights issue, 1.0 billion euros of hybrid debt instruments and a senior debt issue.
Solvay also announced its second quarter results on Wednesday. Core profit, adjusted for one-off items rose 8.1 percent in the second quarter to 500 million euros, in line with the 499 million expected in a Reuters poll of seven analysts.
The company said its specialty materials and chemicals businesses gained, but demand declined substantially for chemicals used in the oil and gas sector.
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