Solvay to buy Russian soda ash plant
AMSTERDAM (Reuters) - Belgium's Solvay (SOLB.BR) said on Tuesday it had agreed to buy Sodium Group Investments Limited's majority stake in the Berezniki soda ash plant in Russia for an enterprise value of 160 million euros ($230.2 million).
Solvay, the world's leading maker of soda ash, a key raw material for glass, said it was buying Sodium Group's 90 percent stake in OAO Bereznikovsky Sodovy Zavod and 100 percent stake in ZAO Berkhimprom, which are merging.
After the closing of the deal next year, Solvay will gain immediate control of the operation of the plant and Sodium Group will retain a minority share for three years. The acquisition will be paid over this period.
The enterprise value of the deal is subject to closing adjustments and Solvay spokesman Erik De Leye said the company will not be able to say what the equity value is until cash and debt is taken into account at closing.
"Solvay's strategy of expanding in emerging markets in products it knows well and where it has strong positions is a good one," KBC analyst Wim Hoste said.
Shares in Solvay fell in early trade and at 4:14 a.m. EDT were down 1 percent, compared with a flat DJ Stoxx European chemicals index .SX4P.
Solvay's shares have risen almost 30 percent since it announced in April it was mulling the possible sale of its drugs unit, with a market cap of 6.3 billion euros, so the Russian deal is not seen as transformational.
The Belgian drugs, chemicals and plastics maker said the soda ash plant is one of the three major soda ash producers in Russia, with a capacity of 500,000 metric tonnes per year.
It can only produce light soda ash but dense soda ash will be available by the end of this year when the construction of a densification unit is finalized.
"With this acquisition, Solvay clearly pursues its strategy of geographical expansion in a major market," chemicals sector general manager Vincent De Cuyper said in a statement.
Solvay is already active in Russia, where it is working in a joint venture with Gazprom (GAZP.MM) bank unit Sibur to build a vinyls plant in Kstovo, in the Nizhny Novgorod region of Russia, that will also produce caustic soda.
It also bought Egypt's state-run soda ash company Alexandria Sodium Carbonate Company for 100 million euros in 2008.
Solvay expects to finalize the acquisition of the Russian plant in the first quarter of 2010.
(Additional reporting by Greg Roumeliotis, editing by Will Waterman and Rupert Winchester)
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