Solutia to Acquire Vianova
The acquisition positions Solutia as a leading player in the global market for coatings ingredients in the automotive, industrial, and specialty sectors. Excluding any restructuring charge, Solutia expects the acquisition to immediate provide strong positive cash flow, though it will be mildly dilutive through the first year
Solutia plans to combine its existing coatings materials business with Vianova, and retain Vianova's management. "This gives us the ability to be a full service supplier to our coatings customers," says Solution Resins VP/GM Bob Toth. "Solutia will be the premier merchant supplier of resins and additives for the automotive, industrial and specialty coatings markets."
Vianova, in turn, benefits from reintegration into a larger chemical corporation.
Solutia expects the merged companies to save about $20 million per year, which will enable the business to achieve targeted operating margins of 15%. The combination of cost synergies and revenue growth will make the acquisition "clearly accretive" in year two, says the company.
Approximately 85% of Vianova's sales are in Europe. The company sells more than 1650 branded products. The most important of them include: Resydrol waterborne alkyd resins, Maprenal amino resins, Viacryl and Macrynal acrylic resins, Viaktin UV curing resins, Vialkyd alkyd resins, Beckopox epoxy resins, Alftalat and Synthacryl powder coating resins, Daotan polyurethane emulsions, and Additol dispersing and rheology control additives.
Vianova operates subsidiaries in Austria, Belgium, Denmark, France, Germany, Greece, Italy, the Netherlands, Portugal, Spain, Turkey, and the United Kingdom. It also has affiliates in Brazil, Canada, Korea, Thailand, and the United States. The company employs 1650 people and had 1998 sales of about $500 million.
With 1998 sales of $2.8 billion, Solutia is a much larger company. Its coatings ingredients business, however, is significantly smaller, with most sales confined to North America. Its key products include Resimene amino crosslinkers for thermoset surface coatings; Modaflow flow and leveling agents; Santosol environmentally friendly solvents; and Butvar binding resins.
"This acquisition more than doubles our sales in Europe, adding the kind of branded, market leading products, technologies, and technical customer service capabilities that are the hallmarks of Solutia's portfolio," says Solutia CEO/president John Hunter. "With the Vianova acquisition, Solutia is creating a product portfolio and geographic presence that will be unmatched by any other supplier to the performance coatings market."
"The acquisition of Vianova Resins represents an important step in our strategy to improve the growth rates and profitability of Solutia's business portfolio, and to move us towards being a $5 billion enterprise in the next five years," he continues Hunter.
Vianova is especially attractive because of its technology position in the fast-growing waterborne and powder coating segments. Hunter expects those businesses to grow 8-10% annually. He projects the combined coatings business to rise about 5% per year.
"We are eager not only to market our Solutia brands in Europe, but more importantly to introduce Vianova's well known European brands to the US," adds Toth. "In addition, the combined product portfolio will give coatings resins customers in Asia and South America access to superior products supplied from regional manufacturing facilities, as well as formulation technology from regional technical centers of excellence."
Solutia expects to complete the acquisition later this year, subject to EU Merger Control Clearance and the purchase of remaining shares held by Vianova management and other individual investors.
Edited by Alan S. Brown
