Solvay and INEOS to create a world-class PVC producer Solvay ...
Post on 06-Jan-2017
244 Views
Preview:
Transcript
Solvay and INEOS to create a world-class PVC producer
Solvay accelerates its transformation
May 7th, 2013
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Accelerating our transformation: a significant step in the reshaping of our portfolio
A structural answer to a challenged Vinyls market with overcapacity in Europe
Contributing to create with INEOS a robust global player with long term enhanced competitiveness
Enhancing Solvay’s business profile and reducing its sensitivity to business cycles
4
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
A project to secure the long-term development of Solvay’s chlorvinyls activities in Europe
• Creation of a robust player combining Solvay’s and INEOS’ assets
• 50-50 joint venture to benefit from: • high-quality assets• synergies mostly from variable cost savings• reduced cost base and enhanced competitiveness
• A more reliable and competitive access to PVC for our customers
• No site closures foreseen in the deal
6
Key ChallengesKey Challenges
• Significant overcapacity in Europe for the foreseeable future
• Demand dropped by 30% since 2007
A response to a challenging European market
c.30% decrease since 2007 peak
Annual Demand (K ton)Annual Demand (K ton)
• Exports from Europe are expected to decline in the future
• Growing gap between EU and US energy and petrochemical scenarios (shale gas) likely to increase pressure
7
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
INEOS group overview
• INEOS has built its position through a large stream of acquisitions since 1998
• INEOS Kerling gathers chlorvinyls activity and related businesses
• INEOS is the current owner of Solvay’s ex polyolefins business
INEOS at a GlanceINEOS at a Glance
Turnover:USD 43 bn
Sites: 51 Manufacturing Plants
in 11 countries
Production: 74 m tons
(54 in chemicals +20 in refinery)
Employees:15,000
Kerling revenues (2011) Kerling revenues (2011)
55
5353
2121
66
1515
Other
E-PVC
Caustic
Compounds
S-PVC
% By Product
66
1616
1313
4545 2020
Germany
France
Other
Scandinavia
UK
% By Country
Total: €2,806 million
9
INEOS in Belgium
Manufacturing Sites Sales Offices
Key statistics INEOS Belgium (2012):
• Revenue: ~ €3,200 MM
• Headcount: ~1,9001
1. Excluding Styrolution2. 50-50 JV with BASF in the styrenics
Antwerp/Lillo: Phenol PolyolefinsStyrolution2 (Styrene derivatives)
Geel: Olefins & Polymers
Tessenderlo(bought in 2011): ChlorVinyls
Neder-Over-Heembeek: Olefins & Polymers
Feluy: Oligomers
10
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Solvay-INEOS joint venture at a glance
• Ranking among top 3 PVC players worldwide
• 50-50 joint venture with equal governance
• Combined sales of € 4.3 billion pro forma 2012
• Combined REBITDA of € 257 million pro forma 2012
• 17 production sites in 9 countries
•
5,650 employees
• Solvay to exit between 4 and 6 years after the JV creation
• INEOS to subsequently become the sole owner of the business
12
Combination would be the #2 global player based on capacities
(in kt/year)
1. Includes Shintech and CIRES2. Including LVM
Source: CMAI 2012, Solvay
(1)
(2)
PVC Capacity of Top 10 WW Producers in 2012 (excl. China)PVC Capacity of Top 10 WW Producers in 2012 (excl. China)
13
An excellent fit: assets, skills, footprint
• Sharing best practices to improve production processes
energy consumption, ethylene yield…
• Streamlined product mix and increased specialization of plants
each plant to focus on the production of a specific range of products
• Optimizing raw material and energy purchases and usage
such as electricity, ethylene, salt…
• Reducing logistics & transport costs
• Joining marketing and sales forces
Significant synergies potentialSignificant synergies potential
14
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Perimeter of the joint venture
• 2012 Net sales of € 1.9 bn• 7 plants with 2,300 employees in 5 European
countries• 5 membrane cellrooms• SolVin*
• excluding VDC, PVDC and RusVinyl**
• All chlorine / caustic soda production units• excluding Povoa, Bussi and Torrelavega
• Salt at Tavaux, Martorell and Jemeppe• Chlorine derivatives in Europe (Epichlorohydrin, CLM, HCl, Hypo)
• SolVin’s shareholding in Feyzin cracker
Solvay PerimeterSolvay Perimeter INEOS PerimeterINEOS Perimeter
* Solvin – joint venture between Solvay (75%) and BASF (25%)
** Rusvinyl – Joint venture between Solvay and Sibur
• 2012 Net Sales of € 2.4 bn
• 10 plants with 3,350 employees in 7 European countries
• 3 membrane cellrooms
• Kerling: chlorvinyls activity and related business
• excluding 50 % Rafnes cracker and some minor assets
16
Solvay + INEOSSolvay + INEOS Product contribution of each plantProduct contribution of each plant
Combined reach
Solvay INEOS Country Site PVC VCM CI2 EPI
NaOH, CL2and Cl
inorganicsChlorinated
Solvents Others
Belgium Jemeppe x x x x
Antwerp x x
Tessenderlo x x x
France Tavaux x x x x x x x
Feyzin (Cracker) x
Mazingarbe x
Germany Rheinberg x x x x x x
Wilhelmshaven x x x
Schkopau x
Italy Rosignano x x x
Netherlands Geleen x
Norway Porsgrunn x
Rafnes x x x
Spain Martorell x x x x
Sweden Stenungsund x x x x
UK Aycliffe, Durham x
Runcorn x x x x x x
1
2
4
5
3
7
10
14
6
8
9
11
12
13
15
16
1714
10
54
17
16
15
8
96
7
1213
113
1
2
17
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Key terms of the transaction and next steps
• The LOI provides exit mechanisms:• Solvay to sell its 50% stake between four and six years after the joint-venture’s creation• INEOS to subsequently become the sole owner of the business
• Exit value for Solvay based on a mid cycle REBITDA multiple of 5.5x
• Solvay to receive €250 million upfront cash payment
• Next steps: • Launch of information/consultation procedures• Transaction subject to customary closing conditions, including anti-trust approval• Closing expected by year-end
19
Agenda
• A key milestone in Solvay’s transformation
• Joint venture’s strategic rationale
• INEOS overview
• Joint venture overview
• Contributions to the joint venture
• Key terms of the transaction and next steps
• Key takeaways
Accelerating Solvay’s value creating transformation
1
2
3
4
Significant business profile enhancement by reducing Solvay’s exposure to cyclical businesses with structural challenges
Strong industrial logic: creation of a world class PVC producer with low cost base and significant synergies potential
JV to improve Solvay’s financial metrics: REBITDA margin up by 170 bp (from 16.6% to 18.3%*) and increased CFROI
Exit mechanism at fair valuation
*2012 basis
21
Enhancing Solvay’s business profile
*2012 basis
By Operating Segment*By Operating Segment*
1111Consumer
Chemicals
Advanced Materials
Performance Chemicals
Functional Polymers
Energy Services
44Consumer
Chemicals
Advanced Materials
Performance Chemicals
Functional Polymers
Energy Services
By region*By region* Latam
North America
Asia
Latam
Europe
Asia28%28% 32%32%
11%11%
Total 2012 net sales:€12,4 bn
North America
42%20%20%
10%10%
Total 2012 net sales:€10,5 bn
Europe
34%23%23%
5154
POST JVPRE JV
22
safe harbour“To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a number of factors, including whether or not binding agreements will be reached between the parties and the final contents thereof, general economic factors, third party approvals, interest rate and foreign currency exchange rate fluctuations; changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals; regulatory approval processes, all-in scenario of R&D projects and other unusual items. Consequently, actual results or the implementation of the transaction may differ materially from the results or the transaction expressed or implied by such forward-looking statements or may not be achieved at all. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "believes," "may," "could" "estimates," "intends", "goals", "targets", "objectives", "potential", and other words of similar meaning. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update any forward-looking statements"
23
top related