Solvay makes friendly bid for France's Rhodia
Belgian chemicals and plastics group Solvay said Monday it was making a friendly takeover bid for its French rival Rhodia worth 3.4 billion euros ($4.8 billion) to create a world leader in the sector.
Solvay said it was offering 31.60 euros per Rhodia share, a premium to the closing share price on Friday. In Paris, Rhodia shares jumped 48 percent to 31.17 euros while the overall market was down 0.15 percent.
Solvay said it would fund the offer wholly through its own resources and its financial structure would remain solid as a result. The company earned 5.2 billion euros from the recent sale of its pharmacy division to Abbot.
The Belgian company said the bid was agreed by the two boards, making it a friendly offer, adding that the deal would boost earnings from the first year.
A combined Solvay-Rhodia would have annual sales of 12 billion euros, with an increased exposure to Asia, while the deal itself should bring annual cost savings of 250 million euros within three years.
The new company will derive 40 percent of its sales from emerging markets, thanks to Rhodia's strong presence in Brazil and China.
"Solvay and Rhodia announce the signing yesterday of a framework agreement according to which Solvay will launch a friendly cash Offer for 100% of the share capital of Rhodia," Solvay said in a statement.
"The transaction has been recommended unanimously by the board of directors of Rhodia," it added.
"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 Solvay's chief executive Christian Jourquin.
He said the company envisaged doubling its earnings to almost two billion euros "and creating a major global chemicals platform under the banner of Solvay".
His opposite number at Rhodia, Jean-Pierre Clamadieu, echoed that "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."
Clamadieu will become deputy chief executive of Solvay and is expected to take the helm of the company once Jourquin retires within two years.
A counter-offer for Rhodia could still be possible given that the stock is very liquid, said analysts at Paris-based brokerage Oddo, but they noted that they had identified no companies with a balance sheet sufficiently strong to table a bid topping Solvay's offer.
The takeover is a mini-revenge for Belgium after seeing a string of Belgian firms bought up by its large neighbour.
Fortis, Petrofina, Royale Belge, Tractebel GB and Delhaize supermarkets are just some of the names to have switched out of Belgian hands in recent years.
Even so, one of the reasons that Solvay can make the buyout is because in 2009 it sold its pharmaceuticals business to US Abbott Laboratories (ABT).
Dow Jones Newswire contributed to this story.
© 2011 AFP