With its agreement to acquire all shares of US-based Cytec for $5.5 billion in cash, unanimously recommended by both companies’ boards, Solvay is moving with full force into the high-performance plastic composites sector.

To clinch the deal, the Belgian chemical group said it has arranged committed bridge financing, which it plans to fund with a €1.5 billion rights issue, €1 billion of additional hybrid instruments and a senior debt issuance.

Headquartered in New Jersey, Cytec has 4,600 employees worldwide. For 2014 it reported sales of $2 billion, along with a 20% REBITDA (recurring earnings before interest, taxes and depreciation) margin. Nearly half of its revenues derive from North America, almost a third from EMEA and the remainder from Asia Pacific and Latin America.

The company’s principal application market is the aeronautics sector, for which it manufactures and markets primary and secondary structural parts such as carbon- and glass fibre-reinforced prepregs for aircrafts. Principal customers are airplane manufacturers Boeing, Airbus and Bombardier.

Through the acquisition, Solvay said it will gain “critical scale and immediate customer intimacy” in aerospace. In the automotive market, the chemical group said its own strong positions with OEM manufacturers and tier-one suppliers will help bolster Cytec’s growth.

Cytec is also claimed to be the leader in tailored specialty chemical formulations to enhance mining separation processes, and it is also developing new technological applications for composites in the automotive sector. 

Solvay plans to integrate the acquired composites businesses into its Advanced Materials operating segment. The mining chemicals as well as niche additives and phosphine specialty chemical businesses will become part of Solvay’s Advanced Formulations segment.

The proposed acquisition “marks a major step change in Solvay’s portfolio upgrade,” said CEO Jean-Pierre Clamadieu. He said 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.”

Cytec CEO Shane Fleming said Solvay’s strategic focus is “perfectly aligned with our businesses, while the technology synergies with their specialty polymers and formulations expertise should accelerate our growth. Our customers and our employees should expect to see continuity and strong support of our current strategy.”