Solvay and INEOS have agreed to combine their chlorvinyls
businesses into a 50-50 joint venture, thereby becoming one of
the largest polyvinyl chloride (PVC) producers in the world,
the companies said on Tuesday.
"The newly combined business, which will be of world scale,
will be able to better respond to rapidly changing European
markets and to match increasing competition from global
producers, said INEOS chairman Jim Ratcliffe.
Belgium-based Solvay will provide its vinyl activities --
currently part of Solvin, a joint venture between Solvay and
BASF -- and its Chlor Chemicals business.
Meanwhile, Switzerland-based INEOS will contribute the
chlorvinyls business of its Kerling subsidiary, which it says
is Europe's largest PVC producer. It operates out of 10 sites
in seven European countries.
The new INEOS-Solvay business will have 5,650 employees and
combine operations across the chlorvinyls chain, including PVC,
chlorine and caustic soda.
The agreement includes an exit clause where INEOS would
acquire Solvays 50% stake in the venture for five and a
half times its mid-cycle recurring EBITDA.
The option, which would have to be exercised within four and
six years from the venture's launch, would make INEOS the sole
owner of the business. Solvay would be entitled to cash
payments of 250m upon deal completion.
"The joint venture will improve the competitiveness of its
operations in a very challenging environment regarding feedstock and energy costs in
Europe," said Jean-Pierre Clamadieu, CEO of
"We are convinced that this is the right project to secure, for the long
term, the development of Solvays European chlorvinyls
activities, of its employees and its plants," he added.
The merged business would have combined net sales of
4.3bn ($5.7bn), based on 2012 results.