Solvay recently announced it is reviewing plans to split into two independent publicly traded companies — a move the company says will sharpen strategic focus, optimize growth opportunities, and build the foundation for the future.

EssentialCo would comprise leading mono-technology businesses including soda ash, peroxides, silica and coatis, which are reported as Solvay’s Chemicals segment and Special Chem businesses. Reportedly, these businesses generated approximately €4.1 billion in net sales in 2021.

Solvay says EssentialCo would provide technologies that have proven essential across a number of attractive and resilient end markets (including building, consumer goods, automotive) and benefit from a foundation of strong leadership positions. 

SpecialtyCo would include the company’s currently reported materials segment, including its Specialty Polymers business, its Composites business, as well as the majority of its Solutions segment, including Novecare, Technology Solutions, Aroma Performance, and Oil & Gas. These businesses combined generated approximately €6.0 billion in net sales in 2021. As a separate company, SpecialtyCo would be comprised of two business segments: Materials and Consumer and Resources.

Solvay says following the separation, each standalone company would be positioned to:

  • Intensify focus on its strategy and growth opportunities
  • Prioritize resources to meet its unique business needs
  • Apply differentiated operating models to better serve its customers
  • Pursue distinct capital structures and capital allocation priorities
  • Drive sustainability initiatives, including reaching carbon neutrality before 2040 for SpecialtyCo, and before 2050 for EssentialCo
  • Attract and retain talent best suited for distinct businesses
  • Provide a clear investment thesis and visibility to attract a long-term investor base suited to each company

Solvay says each company would have a tailored capital structure that best supports its value-creation objectives. SpecialtyCo would be committed to a strong investment-grade rating. The company would have full financial flexibility at the time of separation to fund its growth plan. EssentialCo would maintain a prudent financial policy to support cash generation. The current investment grade rating of Solvay SA is intended to be preserved until the separation.

Under the separation plan, Solvay’s shareholders would retain their current shares of Solvay stock, which will continue to be listed on Euronext Brussels and Euronext Paris. The separation would be affected by means of a partial demerger of Solvay whereby the specialty businesses will be spun off to SpecialtyCo. Solvay shareholders at the time of separation would receive shares in SpecialtyCo pro rata to their shareholding in Solvay SA. The shares of each company would be expected to be listed on Euronext Brussels and Euronext Paris. The company says it expects to structure the separation in a manner that would be tax efficient for a significant majority of shareholders in key jurisdictions.