Together for PVC

On May 7, 2013, Ineos and Solvay announced they signed a Letter of Intent (LOI) to combine their European chlorvinyls activities in a 50-50 joint venture, which, according to plans, will create a PVC producer with an annual turnover of 4.3 billion euro and 5650 employees in 9 countries.
Solvay would contribute its vinyl activities, which are part of Solvin, as well as its Chlor Chemicals business, spread across seven fully integrated production sites in Europe. These sites include five electrolysis units converted into more energy efficient membrane technology, which supports sustainable production of PVC.
Kerling, the subsidiary of Ineos and the largest PVC producer in Europe, would contribute its chlorvinyls and related businesses that include three modern and large-scale membrane electrolysis units. These assets are based on ten sites in seven European countries.
The Letter Of Intent provides exit mechanisms under which Ineos would acquire Solvay's 50% interest in the joint venture for a value based on a mid-cycle Rebitda multiple of 5.5x. The exit arrangements would have to be exercised between 4 and 6 years from the joint venture's formation, after which Ineos would be the sole owner of the business. Solvay would be entitled to receive upfront cash payments of 250 million euros upon completion of the transaction.
The joint venture should generate significant benefits thanks to: shared best practices that improve production processes, particularly to optimize energy consumption; streamlined product mix and increased specialization of plants; optimized raw material and energy purchases and usage; reduced logistics and transport costs; combined marketing and sales forces.
Jean-Pierre Clamadieu, Solvay's chief executive, said the joint venture would improve the competitiveness of its operations in a very challenging environment regarding feedstock and energy costs in Europe.
"This agreement will result in the creation of a truly competitive and sustainable business that will provide significant benefit to customers such as reliable access to PVC," said Jim Ratcliffe, Chairman, Ineos. "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."