Solvay names its specialties carve out Syensqo

The Belgian chemical maker Solvay says its previously announced plan to split in two will take place by year-end. Its commodity chemical business will keep the Solvay name, while its specialty chemical activities will be carved out into a new company named Syensqo.

With a 160-year legacy, the commodity chemical business will be comprised of “mono-technology” product lines including soda ash, peroxides, and silica. The businesses had pre-tax profits in 2022 of $1.4 billion on sales of $6.0 billion.

The Syensqo business will include polymers and thermoplastic composites as well as specialty chemicals for sectors such as oil and gas, batteries, green hydrogen, and renewable materials. The businesses that will make up Syensqo had pre-tax profits in 2022 of $2.0 billion and sales of $8.5 billion.

Solvay’s debt will be divided between the two entities, with the commodity business carrying a net debt of about $2.0 billion and the specialty business $1.7 billion. All environmental liabilities related to per- and polyfluoroalkyl substances (PFAS) will sit with Syensqo.

After the split, the two businesses will be able to establish capital structures and financial policies best suited for enhancing value, Solvay CEO Ilham Kadri says in a press release.

The Syensqo name makes several allusions: SY represents the first and last letters in Solvay. EN is a nod to Solvay’s founder, Ernest Solvay. SYENS refers to Solvay’s scientific heritage, which goes back to 1911, when Ernest Solvay brought 24 top scientists together for a conference. Q refers to quantum physics, which was discussed at the conference. QO is for company.

In a note to clients, the investment firm Jefferies says the split will increase the financial risk and uncertainty for the two businesses over the long term. The “greatest surprise” from details Solvay shared about the split is the cost of separating the businesses, Jefferies says. Solvay expects restructuring and pension costs to range from $320 million to $430 million. Separation and tax expenses will total $430 million to $550 million.