European Chemical Industry News & Insights

Solvay and INEOS to Form Leading PVC Producer

At a glance
  • The joint venture will have pro-forma net sales of EUR 4.3 billion and REBITDA of EUR 257 million.
  • The combined business will employ around 5,650 people across 9 countries.
  • Solvay will receive upfront cash payments of EUR 250 million upon completion.
  • The exit mechanism allows INEOS to acquire Solvay's 50% interest within four to six years.

Joint Venture Overview

Solvay and INEOS have signed a Letter of Intent (LOI) to merge their European chlorvinyls activities into a 50-50 joint venture, creating a top-three global PVC producer. The venture aims to leverage both companies' industrial assets, team expertise, and geographical presence to enhance competitiveness.

Financial and Operational Details

The joint venture is projected to have pro-forma net sales of EUR 4.3 billion and a REBITDA of EUR 257 million, based on 2012 figures. It will employ approximately 5,650 people across 9 countries and will integrate assets from both companies, including PVC, caustic soda, and chlorine derivatives. Solvay's Russian joint venture, RusVinyl, is excluded from this transaction.

Synergies and Efficiencies

The collaboration is expected to generate significant synergies through shared best practices, optimized energy consumption, streamlined product mix, specialized plants, and reduced logistics and transport costs. Additionally, the joint venture will benefit from combined marketing and sales efforts.

Contributions and Assets

Solvay will contribute its vinyl activities, part of Solvin, and its Chlor Chemicals business, which includes seven fully integrated production sites in Europe. INEOS's subsidiary, Kerling, will contribute its chlorvinyls and related businesses, including three large-scale membrane electrolysis units across ten sites in seven European countries.

Exit Mechanism and Approvals

The LOI includes an exit mechanism allowing INEOS to acquire Solvay's 50% interest in the joint venture within four to six years, based on a mid-cycle REBITDA multiple of 5.5x. Solvay will receive upfront cash payments of EUR 250 million upon transaction completion. The proposed transaction is subject to employee consultation procedures and anti-trust approval from relevant authorities. Until then, both companies will continue to operate their PVC businesses separately.