AMSTERDAM: Cash-rich Belgian chemicals and plastics maker Solvay ended a year-long hunt for acquisitions, betting on emerging markets with a 3.4 billion euro ($4.8 billion) bid for French rival Rhodia.
Solvay, which sold its drugs unit to its US partner Abbott Laboratories in September 2009 for 4.5 billion euros, said it would bid 31.60 euros per share for Rhodia in a deal that was unanimously recommended by Rhodia's board of directors.
The deal will significantly lift Solvay's exposure to emerging markets, increasing its percentage of sales from fast-growing economies to 40 percent. Rhodia is particularly strong in China and Brazil, and nearly 50 percent of its sales came from high-growth regions in 2010.
"It is positive that the uncertainty is out of the way, the multiple paid is not excessive and it provides Solvay with more emerging markets presence," ABN AMRO analyst Mark van der Geest said.
"On the other side, the portfolio overlap is limited and therefore we doubt that the cost synergies are achievable."
Solvay Chief Executive Christian Jourquin told reporters the two groups were complementary in terms of products and markets and that the combination would greatly reduce the cyclical nature of their business.
Rhodia CEO Jean-Pierre Clamadieu will become the combined group's deputy chief executive once the offer closes and will succeed Jourquin in 2012 upon his retirement.
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