C&EN: TODAY'S HEADLINES - SOLUTIA SELLING BIG UNIT TO UCB

MICHAEL MCCOY

Seeking to improve a precarious financial situation, Solutia has agreed to sell its additives, adhesives, and resins businesses to UCB, the Belgian pharmaceutical and chemical firm, for $500 million plus a $10 million exclusivity fee.

COVERED UCB, which provided coatings resins for Fox Studio in Sydney, Australia, strengthens its position in powder coatings with Solutia acquisition.
UCB PHOTO

The units involved employ roughly 1,700 people and had sales of more than $400 million in the nine months ending Sept. 30, almost 20% of Solutia’s total sales.
The biggest piece of business being sold is the former Vianova Resins, a one-time Hoechst unit that Solutia bought just three years ago for $640 million. Other pieces, such as Resimine amino cross-linkers, are longtime Solutia holdings.

Solutia CEO John C. Hunter III says the deal will allow the company to pay down a substantial amount of debt. “With a much improved debt structure, Solutia will have greater flexibility to deal with future business risk and uncertainty,” he says.

Part of that uncertainty is Solutia’s exposure to lawsuits over polychlorinated biphenyls, the now-banned heat-transfer fluid once made by Monsanto, Solutia’s former parent company. Publicity surrounding PCBs made Solutia’s debt refinancing earlier this year a touch-and-go process (C&EN, Oct. 28, page 22).

For UCB, the purchase more than doubles the size of a chemical business that mainly makes resins for radiation-cured and powder coatings. UCB is also a major producer of polypropylene and cellulose films. Following the acquisition, set for completion early next year, UCB will combine its chemical and films units into a new surface specialties business with annual sales of more than $1.5 billion.

UCB CEO Georges Jacobs emphasizes that pharmaceuticals remains UCB’s core business. He is counting on surface specialties to generate cash that can be used to expand the pharma unit.