Chlorovinyls JV Under Way A New Chlorovinyls Heavyweight: Ineos and Solvay Create Inovyn
The chlorovinyls industry has a new world-class player: Ineos and Solvay bundle their activities in the joint–venture company Inovyn. The new company will operate in eight European countries, generating sales in the billion euros range.
Brussels/Belgium – The joint venture will be expected after a divestments of several company assets, required by the European Commission, in late 2013. The terms of the joint venture agreement have been simplified and adjusted to the remedies as well as challenging market conditions. Solvay will receive an upfront payment of € 175 million at closing and transfer liabilities worth € 250 million into the joint venture. More details about the required remedy package can be found in this article:
To be headquartered in London, Inovyn will have proforma 2013 sales of more than € 3 billion, with 14 sites in eight European countries. Governance will be split equally between the partners.
Solvay to Exit Chlorovinyls
"Thanks to this agreement we now have a unique opportunity to create a world- class competitive player with high-quality assets and substantial synergies, better able to withstand the challenging environment in Europe," said Jean-Pierre Clamadieu, CEO of Solvay. "This is another key step in the transformation of Solvay's business profile."
The Belgian chemicals company will nevertheless exit Inovyn after three years and an additional cash proceeds targeted at € 250 million. These final cash proceeds at exit will be adjusted based on the joint venture's average REBITDA performance during its three-year period, with a minimum exit payment of € 75 million.
A Billion Dollars Chlorine Player
The transaction will result in an accounting impairment of around € 420 million, impacting Solvay's Group share net income in the second quarter of 2014. This impairment, which is predominantly non-cash, includes a € 142 million write-off of Rhodia goodwill that was originally allocated to this business, a deferred depreciation charge of € 60 million, taxes, as well as other costs linked to the structuring of the agreement, for a combined € 70 million.