Solvay announced it is reviewing plans to separate the company into two independent publicly traded companies: EssentialCo would comprise leading 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 billion euros in net sales in 2021.

“The plan to separate into two leading companies represents a pivotal moment in our journey to transform and simplify Solvay,” said Ilham Kadri (in the picture below), CEO of Solvay. “Since we first launched our Grow strategy in 2019, we have taken a number of actions to strengthen our financial and operational performance, focus our portfolio on higher growth and higher margin businesses, and reinforce our business purpose across the organization. We have changed the culture profoundly, with a passion for performance and meritocracy at its core. Our successful focus on cash, costs, and returns has strengthened the Materials and Solutions segments to be more self-sustaining and profitable. At the same time, the Chemicals segment has continued its strong track record of resilient cash generation. Notwithstanding the challenges of the current global environment, we are confident that pursuing this plan would enable us to create compelling value for shareholders over the long-term.”

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; prioritize resources to meet its unique business needs; apply differentiated operating models to better serve its customers; pursue distinct capital structures and capital allocation priorities; drive sustainability initiatives, including reaching carbon neutrality before 2040 for SpecialtyCo, and before 2050 for EssentialCo; attract and retain talent best suited for distinct businesses; provide a clear investment thesis and visibility to attract a long-term investor base suited to each company.

Under the separation plan, Solvay’s shareholders would retain their current shares of Solvay stock, which will continue to be listed on Euronext Brussels and Euronext Paris. The separation would be effected by means of a partial demerger of Solvay whereby the specialty businesses will be spun off to SpecialtyCo. Solvay shareholders at the time of separation would receive shares in SpecialtyCo pro rata to their shareholding in Solvay. The shares of each company would be expected to be listed on Euronext Brussels and Euronext Paris. The company expects to structure the separation in a manner that would be tax efficient for a significant majority of shareholders in key jurisdictions.