* Adds to presence in $8 bln U.S. oil and gas chemicals
* Pays multiple of 10.7 times core profit vs sector's
* Plans to issue $1.3 bln euros of hybrid bonds
* Solvay shares rise 1.6 percent
By Philip Blenkinsop
BRUSSELS, Oct 7 Belgian chemicals and plastics
maker Solvay has agreed to buy privately held
Chemlogics for $1.345 billion, bringing its share of the $8
billion-a-year U.S. market for chemicals used by the oil and gas
industry to 10 percent.
The market is forecast to grow 6 percent a year to 2017,
driven by fracking or horizontal drilling for shale oil and
shale gas as well as deepwater drilling, Solvay said.
Traditionally a maker of low-margin PVC and soda ash, Solvay
bought France's Rhodia in 2011 for its chemicals operations and
has been moving away from PVC since, investing in higher-margin
specialty polymers for energy, water, healthcare and cosmetics.
The company said it will finance the latest deal with cash,
but also said it plans to issue 1 billion euros ($1.36 billion)
of hybrid bonds to refinance debt maturing in 2014.
It is paying a multiple of 10.7 times core profit (EBITDA)
and 8.7 times net of a tax benefit compared to a U.S. specialty
chemicals sector average enterprise value to EBITDA multiple of
9.5, according to Thomson Reuters StarMine data.
"It's not cheap," KBC analyst Wim Hoste said.
"It means certainly that Chemlogics and Solvay must be able
to keep up the growth, but it is a market with a lot of growth
potential," he said.
Solvay said in a statement on Monday that the acquisition
would accelerate its transformation into a group with higher
growth and boost its exposure to a buoyant U.S. energy sector.
Chemlogics, with 277 employees and $500 million of sales in
the last 12 months, has increased its core profit by a
double-digit percentage per year over the past five years.
Solvay said Chemlogics - specialising in friction reducers,
non-emulsifiers and extraction technologies - fits into its
Novecare business, which supplies cosmetics, detergents,
agrochemicals and oil industries, and has technology for
surfactants, natural polymers and eco-friendly solvents.
Solvay shares rose 1.6 percent to 110.5 euros, putting them
among the strongest performers in the FTSEurofirst 300 index
of leading European stocks and one of only two risers
in the STOXX 600 European chemical index.