By Marc Bisbal Arias 
 

Solvay SA (SOLB.BT) said Tuesday that it agreed to sell its polyamides business to BASF SE (BAS.XE) for 1.6 billion euros ($1.92 billion) and restated its recent results and guidance to reflect the sale.

A final agreement is expected in the coming months, Solvay said. The companies aim to close the deal in the third quarter of 2018, after regulatory approval and formal consent of a joint venture partner has been received.

Expected net cash proceeds are estimated at around EUR1.1 billion, Solvay said, adding that taking into account the liabilities of about EUR200 million to be transferred, the net financial position will improve by about EUR1.3 billion.

Solvay said the divestment will reduce 2017 growth in earnings before interest, taxes, depreciation and amortization since the polyamide business performed strongly this year. The strong euro will also reduce profit reported in euros. Based on current exchange rates, Solvay estimates 6% to 8% underlying EBITDA growth for 2017.

The deal is a "crucial step" in Solvay's transformation towards a mult-specialty chemicals company, it said.

"Solvay's planned divestment of Polyamides marks a tipping point in the profound transformation journey we began four years ago," said Chief Executive Jean-Pierre Clamadieu.

The transaction covers Solvay's upstream and downstream polyamides business in Europe, North America and Asia, as well as the downstream engineering plastics business in Latin America. Solvay will retain its upstream intermediates and downstream textile polyamide business in Latin America.

Solvay's polyamides business has become more profitable over the past years, it said.

The business being divested will be reclassified to discontinued operations at the end of September. As a result, the retained Latin American business will incur an impairment of about EUR100 million, which should be more than compensated by the gain on the transaction, Solvay said.

 

Write to Marc Bisbal Arias at marc.bisbalarias@dowjones.com

 

(END) Dow Jones Newswires

September 19, 2017 02:01 ET (06:01 GMT)

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