BRUSSELS Belgian chemicals group Solvay said on Wednesday it had agreed to sell its Acetow unit, which makes material used in cigarette filters, to private equity group Blackstone for 1 billion euros (844.7 million pounds), including debt.
The sale, which Solvay said represented a multiple of seven times core profit (EBITDA), will generate a capital gain of 150 million euros and help to reduce its debt level. The deal is expected to be completed in the first half of 2017.
"Acetow is a commodity business that is going through a decreasing market," said Pascal Juery, head of the business group overseeing the Acetow unit. "It didn't fit the group's strategy anymore," he added.
Acetow made 542 million euros in sales last year, down 16 percent. More than 90 percent of Acetow's revenues come from cigarette filters.
Solvay aims to move away from commoditised high-volume products towards more high-tech solutions with better profit margins.
Last year, the group bought U.S. peer Cytec for $5.5 billion, which makes composite and adhesive materials for the aerospace and automotive industries.
Juery said this was unlikely to be the last business shed in the company's transformation. The company is also reported to be seeking a buyer for its polyamides unit, which makes a heat-resistant engineering plastic known as polyamide 66 for various uses such as textiles, engine air ducts and cooling fans.
(Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop)