The 11th of April Solvay announced its intention to buy Rhodia for €3 billion. This is the last announcement in a long list of acquisitions in the chemical industry in a year that is breaking records. The number of acquisitions is motivated by a market recovering from the economic crisis and that has cash again after 3 years of strong readjustment measures.

Solvay buys Rhodia

Specialty polymers of Solvay

Specialty polymers of Solvay. Source: Solvay

The main products of Brussels based Solvay are sodium carbonate, hydrogen peroxide and specialty polymers. It employs 16,800 people in over 40 countries and in 2010 its consolidated sales were €7.1 billion. The sale of its pharma business for €4.5 billion to Abbott was finalised. This sale focused the rest of the business in the chemicals sector and it has probably facilitated Rhodia’s acquisition. Rhodia employs 14,000 people worldwide and in 2010 its sales amounted to €5.23 billion. Its internal structure is a bit complicated, with 5 clusters and 11 business units. The main products of Solvay and Rhodia are summarised in the table below:

Solvay Rhodia
Chemicals Cellulose acetate
Advanced materials Diphenols and derivatives
Barium and Strontium products Engineering plastics
Calcium Chloride Fluorinated compounds
Caustic soda Phosphorous derivatives
Chlorinated products Polyamide intermediates
Fluor products Polyamide fibres
Magnesium products Silica precipitate
Peroxides Rare earths, aluminas y oxides
Polyglycerols Salicylic and derivatives
Precipitated calcium carbonate PCC Solvents
Sodium bicarbonate Specialty polymers and monomers
Soda Ash Sulphuric acid and services
Specialty polymers (see figure above) Surfactants
Textile Yarns

In the friendly buyout agreement, both companies consider that the resulting group will have sales of approximately €12 billion, of which 40% will be in emerging economies. To this respect, Solvay has a strong presence in China, while Rhodia is more active in Russia and Thailand. This will favour growth of the resulting company in these regions.

A year with plenty of acquisitions

But the acquisition of Rhodia by Solvay is not the only one we have seen this year. Bloomberg has calculated the overall value of deals in the chemical industry during 2011 to be $25 billion, the greatest of the decade. The average price tag of deals has been $720 millions. Many analysts believe that the boom in deals has not yet finished and that more chemical companies have the required cash to acquire other players. Some of the acquisitions taken place this year are listed below:

Date/Status Buyer Target Amount
Announced April 2011 Solvay Rhodia €3 billion
December 2011 BASF Cognis $4.3 billion
Planned DuPont Danisco $6 billion
Announced February 2011 Clariant Süd Chemie €2 billion
February 2011 DSM Market Biosciences €790 millions
March 2011 Berkshire Hathaway Inc Lubrizol Corp $9.2 billion

Acquisitions are usually motivated by one of the following reasons:

  • Widen existing portfolio, incorporating added value products if possible. Products derived from renewable sources are very coveted nowadays, together with companies producing nutraceuticals or ingredients.
  • Increase geographic coverage in a fast and efficient way.
  • Enter new markets, creating synergies with existing products.

More information

Doubts over the buying of Danisco by DuPont

Clariant will buy 95% of Süd Chemie

DSM buys Martek Biosciences

BASF completes acquisition of Cognis