EssentialCo would be comprised of the Brussels-based group’s soda ash, peroxides, silica and Coatis businesses, which have €4.1 billion in annual sales, while SpecialtyCo would include its specialty polymers, composites and the majority of its solutions segment, with sales of around €6 billion.

According to preliminary plans, the split would take place through a partial demerger of the existing structure, followed by a spinoff of the specialties activities to SpecialtyCo. Solvay shareholders would receive stock in SpecialtyCo pro rata to their shareholding in the existing structure.

The spinoff plans mirror those conducted by other chemical majors over the past decades, for the most part along similar commodity/specialty fault lines. Bayer, for example, split into four parts, pharmaceuticals, crop science, engineering plastics and chemicals. DuPont carved out its chemicals business into Chemours, and DSM currently is subdividing itself into separate parts.

The composition of the new Solvay entities’ boards and management teams will be announced at a later date, and the new formal names for each company of the independent entities revealed, the Belgian group said, adding that all of the plans will be subject to market conditions, approval of the board and shareholder approval.

In presenting its annual results for 2021, Solvay touched on plans to restructure its business, but UK business newspaper Financial Times said the plan to actually split the company is an apparent reaction to the Ukraine war. The paper said the spin-offs could lift the value of the chemical producer’s stock, which has lagged behind its peers.

Commenting on the Mar. 15 announcement, CEO Ilham Kadri said, that since Solvay launched its G.R.O.W. strategy in 2019, its 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,” she said.

Author: Dede Williams, Freelance Journalist