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Solvay exits pharma business to support plastics and chemicals

Belgian chemicals and plastics power Solvay will this year complete the sale of its pharmaceutical business to Abbott for about €5.2 billion, and plans to use the proceeds to grow its plastics and chemicals divisions both internally and via acquisitions. In a presentation to shareholders the firm’s executives said that due diligence of potential acquisitions is well underway, though they naturally did not identify any of the potential takeover targets.

Solvay’s move comes after some years of shifting among major plastics suppliers and chemical companies towards greater footing in pharmaceuticals and less exposure to chemicals and plastics. Solvay’s divestment is expected to be closed in the first quarter of 2010, pending the approval by the relevant competition authorities. After closing, the supplier says it will reinvest the proceeds in organic and “sizeable external growth.” This also will include expansion of the company’s activities in Asia and Latin America.

Solvay’s plastics division is a major supplier of PVC and currently also supplies aromatic polyamide, fluoroelastomers and fluoropolymers, liquid crystal polymer, and high-heat materials such as PEEK and PAI, as well as others. The company’s plastics investments of the last few years have been in PEEK and other high-end materials as it has sought to limit its exposure to more cyclical demand cycles such as those associated with PVC. [email protected]

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