NEWS OF THE WEEK
EUROPEAN VINYLS GIANT EMERGES
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SOLVAY
PLASTICS: Solvay, Ineos say joining together will help them tough out a rough marketplace
spend on high-value goods such as cars and housing.” Ineos CEO James A. Ratcliffe hopes consolidation of the two units will help. “The newly combined business, which will be of world scale, will be able to better respond to rapidly changing European markets and to match increasing competition from global producers,” he said. Ineos, which is composed largely of the cast-off assets of large chemical companies, has been a consolidator in the European PVC industry. In 2011, it bought Tessenderlo’s PVC operations. Earlier this year, it announced the closure of smaller PVC-related operations at various European plants. The partners, however, don’t plan to shutter manufacturing capacity, Clamadieu said. Instead, they will seek to reduce costs through greater purchasing power for raw materials and electricity. For Solvay, the deal is a stepping-stone to an exit from the PVC business. In four to six years after the joint venture is formed, Ineos will have an option to buy out Solvay’s share for 5.5 times earnings plus $325 million in cash. In February, Solvay revealed its intention to sell off its Latin American PVC affiliate, Indupa. Solvay’s interest in RusVinyl, a PVC joint venture with Russian partner Sibur, and its business in the packaging resin polyvinylidene chloride will not be included in the deal. Neither of the parties is contributing any cash to the venture, though both are contributing liabilities such as debt and pensions.—ALEX TULLO
N A FURTHER CONSOLIDATION of the troubled
European polyvinyl chloride industry, Belgiumbased Solvay and Switzerland-based Ineos have agreed to pool their chlorine and PVC-related assets in a new joint venture. The venture will be the second-largest PVC maker in the world, behind Shin-Etsu Chemical and just ahead of Formosa Plastics. The partnership will have $5.6 billion in annual sales and about $340 million in beforetax profits. It will operate 17 plants, all in Europe, and employ 5,650 people. The plants make PVC as well as raw materials such as chlorine, ethylene dichloride, and vinyl chloride. The aim of the joint venture “is to improve its competitiveness in an environment which is, once again, a challenging one,” Solvay CEO Jean-Pierre Clamadieu told stock analysts last week. Europe has been a tough region for PVC makers in recent years. According to Solvay figures, European demand for the plastic, used in construction materials such as pipe, has declined 30% since 2007. Another European PVC producer, Kem One, recently declared bankruptcy. PVC demand is being hit on all fronts by the weak European economy, according to Janet Wright, chloralkali and vinyls business manager at the consulting firm Tecnon OrbiChem. “This has impacted industries such as construction and automobile production, which consume vast quantities of PVC,” she says. “Governments have very little money to spend on infrastructure projects. Consumers are reluctant to
Solvay’s PVC plant in Jemeppe-surSambre, Belgium.
BRITISH BIOSCIENCE AstraZeneca’s Alderley Park site remade as multicompany biotech campus Three U.K. biotech firms are moving to BioHub, a new bioscience center at AstraZeneca’s Alderley Park research campus near Manchester, England. The influx comes less than two months after AstraZeneca disclosed that it is ending research at Alderley Park and moving the site’s 1,600 scientists to other locations. Redx Pharma, a Liverpool, Englandbased drug discovery and development firm, is creating a subsidiary, Redx AntiInfectives, that will locate in BioHub. The new business will establish a $16 million
R&D center where a team of 119 scientists will develop drugs for combating antibiotic resistance and new medicines for viral infections. Redx has secured a $7 million grant from the U.K. government’s Regional Growth Fund. AstraZeneca “made a compelling commercial case to attract us to Alderley Park,” says Redx CEO Neil Murray. Imagen Biotech, a drug discovery firm and provider of screening technologies for the pharmaceutical industry, and Blueberry Therapeutics, a drug discovery firm targeting medicines for unmet
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medical needs, have already moved to Alderley Park. With assistance from a government task force, AstraZeneca plans to attract more science companies to the site. Plans to repurpose Alderley Park as a biotech hub are similar to those that followed Pfizer’s 2011 closure of an R&D campus in Sandwich, England, a move that eliminated about 1,500 science jobs. More than a dozen biotech firms have since moved to the Sandwich site, where benefits include company tax relief.— ALEX SCOTT
