Solvay Unlocking the value
The separate listing of Syensqo and Solvay is now imminent, although yet dependent on EGM approval. Both Syensqo and Solvay will start off with a strong balance sheet, albeit with a different strategic agenda. Syensqo will be mainly run for growth while Solvay will be run conservatively and with dividend pay out as a priority. Whilst the longer term growth potential is definitely more attractive for Syensqo, Solvay might be interesting as a fairly resilient base chemicals group with a particularly attractive dividend yield (which we estimate could reach high single digits). Our fair value estimates of Syensqo and Solvay stand at respectively €120-121 and € 44-55, leading to a combined fair value range of € 164-176. Valuation looks very compelling and we expect the separation will unlock the value. BUY rating maintained.Solvay is engaged in chemical and plastic businesses worldwide. Co. offers chemical products such as advanced materials, barium strontium, calcium chloride, caustic soda, chlorinated products, fluor, peroxygen products, polyglycerols, precipitated calcium carbonate, soda ash, and sodium bicarbonate. It also provides specialty polymers, such as Spire ultra polymers, Solviva biomaterials, and sulfone polymers. Co. structures its activities around five operating segments: Advanced Formulations, Advanced Materials, Performance Chemicals, Functional Polymers and Corporate & Business Services, each with its own specific business model and each comprised of Global Business Units (GBUs).
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