Solvay to acquire US-based Cytec for $5.5bn

Belgian firm Solvay has signed a deal to acquire US-based Cytec for $5.5bn, to exploit the demand for lightweight composite materials in the aerospace industry.

Cytec is engaged in the production of composite materials and mining chemicals.

Its composite materials operations represent two thirds of the company’s sales, providing primary and secondary structures for aircraft.

Last year, the New Jersey-headquartered firm recorded revenues of $2bn with 20% recurring earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin. It has a workforce of 4,600.

Solvay’s per share offer for Cytec represents a premium of 28.9% over the closing price of the latter on 28 July.

Solvay CEO Jean-Pierre Clamadieu said: "The proposed acquisition of Cytec marks a major step change in Solvay’s portfolio upgrade.

"It is a unique opportunity for Solvay to boost its customer offerings in lightweighting with advanced materials in aerospace and automotive, as well as to strengthen its know-how with activities in mining chemicals."

The company plans to finance the acquisition through a €1.5bn rights issue, €1bn of hybrid debt, and a senior debt issue.

Solvay intends to operate Cytec’s composites businesses as part of its advanced materials operating segment, while Cytec’s mining chemicals and additives and phosphine speciality chemical businesses will operate under Solvay’s advanced formulations unit.

Cytec CEO Shane Fleming said: "We are excited to be joining with Solvay, a leading player in the chemical industry with over 150 years of success.

"Their strategic focus is perfectly aligned with our businesses, while the technology synergies with their specialty polymers and formulations expertise should accelerate our growth."

Subject to customary closing conditions, including regulatory approvals, the deal is expected to be completed in the fourth quarter of the year.

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Image: Solvay office headquarters in Belgium. Photo: © Jean Michel Byl / Solvay.