Solvay and Rhodia have a framework agreement allowing Solvay to launch a friendly cash offer for 100% of the share capital of Rhodia. The cash offer at 31.60 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 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 US. The transaction has been recommended unanimously by the board of directors of Rhodia.
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.
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 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.
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 Christian Jourquin, CEO of Solvay. We see the possibility of doubling our REBITDA to almost EUR 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.