Solvay announced that it is reviewing plans to separate the Company into two independent publicly traded companies: SpecialtyCo to be a pure play specialty leader with accelerated growth potential, and EssentialCo to be an essential chemicals leader with resilient cash generation. EssentialCo would comprise mono-technology businesses including Soda Ash, Peroxides, Silica and Coatis, which are reported as the Company’s Chemicals segment, as well as the Special Chem business. These businesses generated approximately 4.1 billion euros in net sales in 2021. SpecialtyCo would comprise the Company’s currently reported Materials segment, including its high-growth, high-margin Specialty Polymers, its high-performance Composites business, as well as the majority of its Solutions segment, including Novecare, Technology Solutions, Aroma Performance, and Oil & Gas. These businesses combined generated approximately 6.0 billion euros in net sales in 2021.
Benefits of the Separation
Upon completion, 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. Following the separation, each standalone company would be positioned 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, and drive sustainability initiatives, including reaching carbon neutrality before 2040 for SpecialtyCo, and before 2050 for EssentialCo.
Essential chemicals leader
EssentialCo would provide technologies that have proven essential across a number of attractive and resilient end markets (including building, consumer goods, automotive) and benefit from a foundation of strong leadership positions. As an independent company, EssentialCo would be positioned to further reinforce its leadership through expansion and consolidation opportunities, including accelerating growth in natural soda ash and sodium bicarbonate, pursuing growth in the Asia-Pacific region and further extending its leadership in a consolidating peroxide market. It would also play a key role in accelerating the energy transition that began in its soda ash business in order to be carbon neutral before 2050.
Pure specialty leader
As an independent company, SpecialtyCo would provide innovative, value-added solutions that support a more sustainable world, driving above market growth and strong returns. SpecialtyCo would be comprised of two business segments:
Materials: The Materials segment is an industry leader in advanced materials, focused on bringing new solutions to customers that address critical performance and environmental challenges. Materials has the broadest portfolio of unique, patented materials based on high-performance polymer and carbon fiber composite technologies.
Consumer & Resources: The Consumer & Resources segment primarily consists of businesses within Solvay’s current Solutions segment and would be a market leader in providing specialty ingredients focused on more natural and sustainable solutions by anticipating rapidly evolving customer needs. With a proven, asset-light business model that is supported by underlying megatrends including eco-friendly ingredients and resource efficiency, the segment is well positioned to drive the consumer industry toward biobased, natural and circular solutions.
The composition of the Boards and management teams, as well as naming for each company, will be provided at a later date. The transaction is subject to general market conditions and customary closing conditions, including final approval by Solvay’s Board of Directors, consent of certain financing providers and shareholder approval at an extraordinary general meeting, and is expected to be completed in the second half of 2023. The Board of Directors of Solvac, Solvay’s long-standing reference shareholder, has confirmed its support of Solvay’s transaction.
