...Leveraging on Cytec Acquisition: Solvay SA announced in July its plan to acquire US-based composites producer Cytec (USD2bn turnover and 20% EBITDA margin) by the end of 2015. It plans to fund the acquisition with EUR5.2bn bridge financing which will probably be replaced with EUR1.5bn in equity, a EUR1bn hybrid bond and EUR2.7bn senior debt in 2016. As a result, Solvay's 2015 funds from operations (FFO) net leverage is forecast to increase to 5x, before falling to 2.8x in 2016 following consolidation and equity and hybrid issuance. We expect the acquisition will improve Solvay's operational profile and will help it maintain well- balanced end-market and geographical diversification. From 2016 we expect the acquisition to add 17%-19% to sales at an EBITDA margin of around 20%, increase exposure to speciality chemicals which cater for automotive and aerospace markets, and moderately increase Solvay's sales in North America at the expense of the Asia-Pacific region. Weak Commodity Markets:...
