Solvay and INEOS to create a world-class PVC producer Solvay accelerates its transformation

Transcription

1 Solvay and INEOS to create a world-class PVC producer Solvay accelerates its transformation May 7 th, 2013

2 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

3 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

4 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

5 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

6 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 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

7 A response to a challenging European market Key Challenges Significant overcapacity in Europe for the foreseeable future Demand dropped by 30% since 2007 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 Annual Demand (K ton) c.30% decrease since 2007 peak 7

8 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

9 INEOS group overview INEOS at a Glance Turnover: USD 43 bn Employees: 15,000 Production: 74 m tons (54 in chemicals +20 in refinery) Sites: 51 Manufacturing Plants in 11 countries 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 Compounds Caustic Total: 2,806 million Other E-PVC % By Product 5 Kerling revenues (2011) 53 S-PVC Other % By Country 6 France 13 UK 16 Scandinavia Germany 9

10 INEOS in Belgium Antwerp/Lillo: Phenol Polyolefins Styrolution 2 (Styrene derivatives) Geel: Olefins & Polymers Neder-Over-Heembeek: Olefins & Polymers Tessenderlo (bought in 2011): ChlorVinyls Feluy: Oligomers Key statistics INEOS Belgium (2012): Revenue: ~ 3,200 MM Headcount: ~1,900 1 Manufacturing Sites Sales Offices Excluding Styrolution JV with BASF in the styrenics

11 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

12 Solvay-INEOS joint venture at a glance Ranking among top 3 PVC players worldwide joint venture with equal governance Combined sales of 4.3 billion pro forma 2012 Combined REBITDA of 257 million pro forma 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

13 Combination would be the #2 global player based on capacities (in kt/year) (1) PVC Capacity of Top 10 WW Producers in 2012 (excl. China) (2) 13 Source: CMAI 2012, Solvay 1. Includes Shintech and CIRES 2. Including LVM

14 An excellent fit: assets, skills, footprint Significant synergies potential 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 14

15 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

16 Perimeter of the joint venture Solvay Perimeter INEOS Perimeter 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 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 * Solvin joint venture between Solvay (75%) and BASF (25%) ** Rusvinyl Joint venture between Solvay and Sibur

17 Combined reach Solvay + INEOS Product contribution of each plant Solvay INEOS Country Site PVC VCM CI2 EPI NaOH, CL2 and Cl inorganics Belgium 1 Jemeppe x x x x Chlorinated Solvents Others 2 3 Antwerp x x Tessenderlo x x x France 4 Tavaux x x x x x x x 5 Feyzin (Cracker) x 6 Mazingarbe x Germany 7 Rheinberg x x x x x x 8 Wilhelmshaven x x x Schkopau x Italy 10 Rosignano x x x Netherlands 11 Geleen x Norway 12 Porsgrunn x 13 Rafnes x x x Spain 14 Martorell x x x x Sweden 15 Stenungsund x x x x UK 16 Aycliffe, Durham x 17 Runcorn x x x x x x 17

18 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

19 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

20 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

21 Accelerating Solvay s value creating transformation 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

22 Enhancing Solvay s business profile Functional Polymers Energy Services 11 Consumer Chemicals By Operating Segment * Energy Services Functional Polymers 4 Consumer Chemicals Performance Chemicals Advanced Materials Performance Chemicals Advanced Materials Latam By region * Latam North America 20% 10% Total 2012 net sales: 12,4 bn 42% Europe North America 23% 11% Total 2012 net sales: 10,5 bn 34% Europe Asia 28% Asia 32% PRE JV POST JV 22 *2012 basis

23 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

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