Belgian chemical company Solvay (Brussels; www.solvay.com) has agreed to buy US composites firm Cytec Industries (Woodland Park, New Jersey; www.cytec.com) in a deal worth USD 5.5 bn (EUR 5 bn). The merger would boost Solvay’s presence in the composites sector and make it the second largest player in aerospace composite materials worldwide. For Cytec, Solvay’s strong standing with automotive OEMs and tier-1 suppliers would bolster growth in a sector where it is currently developing new technological applications.

Composite materials represent two thirds of Cytec’s sales, with its principal market in primary and secondary structures for aircraft. Cytec had sales of USD 2 bn in 2014, nearly half of which were in North America, almost a third in Europe, Middle East and Africa, and the rest in Asia-Pacific and Latin America. Airplane manufacturers such as Boeing, Airbus and Bombardier are among the main clients. “The proposed acquisition of Cytec marks a major step change in Solvay’s portfolio upgrade. It is a unique opportunity for Solvay to boost its customer offerings in lightweighting with advanced materials in aerospace and automotive, as well as to strengthen its know-how with activities in mining chemicals,” said Solvay CEO, Jean-Pierre Clamadieu.

Solvay is paying USD 75.25 per share in cash for the Cytec business. As part of the financing, Solvay will issue a EUR 1.5 bn rights issue. The transaction is expected to close in the last quarter of this year. Annual synergies of more than EUR 100m are expected to be realised within three years, chiefly through cost savings and Solvay’s excellence initiative. Cytec’s composites business will be integrated into Solvay’s advanced materials segment.

Meanwhile, Solvay has announced its second-quarter and half-year 2015 results. Recurring operating profit (REBITDA) in Q2 was EUR 500m, an increase of 8.1% year on year, on net sales 4.2% higher at EUR 2.68 bn. Robust volume growth, particularly in its speciality polymers business, lifted REBITDA for its advanced materials segment to EUR 214m, an 18% rise on Q2 2014. The functional polymers segment saw REBITDA increase by 23% year-on-year to reach EUR 45m, supported by the company’s excellence programmes.

For the first half of 2015, REBITDA was 10% higher than the same period last year, at just above EUR 1 bn, with net sales up by 5.3% at EUR 5.3 bn. Solvay said favourable exchange rates and pricing power have more than offset lower volumes across all segments.