Solvay to split in two?

Following on from the examples of other major chemicals companies, such as Bayer and DuPont, Solvay is reviewing plans to separate into two independent publicly traded companies. The process is expected to be completed in 2H 2023.

The company said that the separation “would establish two strong industry leaders that would benefit from the strategic and financial flexibility to focus on their distinctive business models, market and stakeholder priorities”.

‘EssentialCo’ would comprise the single-technology businesses in the current Chemicals segment including Soda Ash, Peroxides, Silica and Coatis, plus the Special Chem business.  Combined, they had approximately €4.1 billion in net sales in 2021.

‘SpecialtyCo’, with €6.0 billion in net sales in 2021, would comprise the Materials segment, including Specialty Polymers, Composites and most of the Solutions segment, including Novecare, Technology Solutions, Aroma Performance and Oil & Gas.  

“The plan to separate into two leading companies represents a pivotal moment in our journey to transform and simplify Solvay,” said CEO Ilham Kadri.

“Since we first launched our GROW strategy in 2019, we have taken a number of actions to strengthen our financial and operational performance, focus our portfolio on higher growth and higher margin businesses, and reinforce our business purpose across the organisation.”

The split would take place through a partial demerger of the existing structure, followed by a spinoff of the speciality activities to SpecialtyCo. Each, the company said, would be able, among other things, to:

* Intensify focus on its strategy and growth opportunities

* Prioritise resources to meet its unique business needs

* Apply differentiated operating models to better serve its customers

* Pursue distinct capital structures and capital allocation priorities

SpecialtyCo would be committed to a strong investment-grade rating, with full financial flexibility at the time of separation to fund its growth plan, Solvay added. Its target date for carbon neutrality will be 2040.