Solvay and INEOS to create a world-class PVC producer

Solvay accelerates its transformation

May 7th, 2013

Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Accelerating our transformation: a significant step in the reshaping of our portfolio

A structural answer to a challenged Vinyls market with overcapacity in Europe

Contributing to create with INEOS a robust global player with long term enhanced competitiveness

Enhancing Solvay’s business profile and reducing its sensitivity to business cycles

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

A project to secure the long-term development of Solvay’s chlorvinyls activities in Europe

• Creation of a robust player combining Solvay’s and INEOS’ assets

• 50-50 joint venture to benefit from: • high-quality assets• synergies mostly from variable cost savings• reduced cost base and enhanced competitiveness

• A more reliable and competitive access to PVC for our customers

• No site closures foreseen in the deal

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Key ChallengesKey Challenges

• Significant overcapacity in Europe for the foreseeable future

• Demand dropped by 30% since 2007

A response to a challenging European market

c.30% decrease since 2007 peak

Annual Demand (K ton)Annual Demand (K ton)

• Exports from Europe are expected to decline in the future

• Growing gap between EU and US energy and petrochemical scenarios (shale gas) likely to increase pressure

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

INEOS group overview

• INEOS has built its position through a large stream of acquisitions since 1998

• INEOS Kerling gathers chlorvinyls activity and related businesses

• INEOS is the current owner of Solvay’s ex polyolefins business

INEOS at a GlanceINEOS at a Glance

Turnover:USD 43 bn

Sites: 51 Manufacturing Plants

in 11 countries

Production: 74 m tons

(54 in chemicals +20 in refinery)

Employees:15,000

Kerling revenues (2011) Kerling revenues (2011)

55

5353

2121

66

1515

Other

E-PVC

Caustic

Compounds

S-PVC

% By Product

66

1616

1313

4545 2020

Germany

France

Other

Scandinavia

UK

% By Country

Total: €2,806 million

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INEOS in Belgium

Manufacturing Sites Sales Offices

Key statistics INEOS Belgium (2012):

• Revenue: ~ €3,200 MM

• Headcount: ~1,9001

1. Excluding Styrolution2. 50-50 JV with BASF in the styrenics

Antwerp/Lillo: Phenol PolyolefinsStyrolution2 (Styrene derivatives)

Geel: Olefins & Polymers

Tessenderlo(bought in 2011): ChlorVinyls

Neder-Over-Heembeek: Olefins & Polymers

Feluy: Oligomers

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Solvay-INEOS joint venture at a glance

• Ranking among top 3 PVC players worldwide

• 50-50 joint venture with equal governance

• Combined sales of € 4.3 billion pro forma 2012

• Combined REBITDA of € 257 million pro forma 2012

• 17 production sites in 9 countries

•

5,650 employees

• Solvay to exit between 4 and 6 years after the JV creation

• INEOS to subsequently become the sole owner of the business

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Combination would be the #2 global player based on capacities

(in kt/year)

1. Includes Shintech and CIRES2. Including LVM

Source: CMAI 2012, Solvay

(1)

(2)

PVC Capacity of Top 10 WW Producers in 2012 (excl. China)PVC Capacity of Top 10 WW Producers in 2012 (excl. China)

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An excellent fit: assets, skills, footprint

• Sharing best practices to improve production processes

energy consumption, ethylene yield…

• Streamlined product mix and increased specialization of plants

each plant to focus on the production of a specific range of products

• Optimizing raw material and energy purchases and usage

such as electricity, ethylene, salt…

• Reducing logistics & transport costs

• Joining marketing and sales forces

Significant synergies potentialSignificant synergies potential

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Perimeter of the joint venture

• 2012 Net sales of € 1.9 bn• 7 plants with 2,300 employees in 5 European

countries• 5 membrane cellrooms• SolVin*

• excluding VDC, PVDC and RusVinyl**

• All chlorine / caustic soda production units• excluding Povoa, Bussi and Torrelavega

• Salt at Tavaux, Martorell and Jemeppe• Chlorine derivatives in Europe (Epichlorohydrin, CLM, HCl, Hypo)

• SolVin’s shareholding in Feyzin cracker

Solvay PerimeterSolvay Perimeter INEOS PerimeterINEOS Perimeter

* Solvin – joint venture between Solvay (75%) and BASF (25%)

** Rusvinyl – Joint venture between Solvay and Sibur

• 2012 Net Sales of € 2.4 bn

• 10 plants with 3,350 employees in 7 European countries

• 3 membrane cellrooms

• Kerling: chlorvinyls activity and related business

• excluding 50 % Rafnes cracker and some minor assets

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Solvay + INEOSSolvay + INEOS Product contribution of each plantProduct contribution of each plant

Combined reach

Solvay INEOS Country Site PVC VCM CI2 EPI

NaOH, CL2and Cl

inorganicsChlorinated

Solvents Others

Belgium Jemeppe x x x x

Antwerp x x

Tessenderlo x x x

France Tavaux x x x x x x x

Feyzin (Cracker) x

Mazingarbe x

Germany Rheinberg x x x x x x

Wilhelmshaven x x x

Schkopau x

Italy Rosignano x x x

Netherlands Geleen x

Norway Porsgrunn x

Rafnes x x x

Spain Martorell x x x x

Sweden Stenungsund x x x x

UK Aycliffe, Durham x

Runcorn x x x x x x

1

2

4

5

3

7

10

14

6

8

9

11

12

13

15

16

1714

10

54

17

16

15

8

96

7

1213

113

1

2

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Key terms of the transaction and next steps

• The LOI provides exit mechanisms:• Solvay to sell its 50% stake between four and six years after the joint-venture’s creation• INEOS to subsequently become the sole owner of the business

• Exit value for Solvay based on a mid cycle REBITDA multiple of 5.5x

• Solvay to receive €250 million upfront cash payment

• Next steps: • Launch of information/consultation procedures• Transaction subject to customary closing conditions, including anti-trust approval• Closing expected by year-end

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Agenda

• A key milestone in Solvay’s transformation

• Joint venture’s strategic rationale

• INEOS overview

• Joint venture overview

• Contributions to the joint venture

• Key terms of the transaction and next steps

• Key takeaways

Accelerating Solvay’s value creating transformation

1

2

3

4

Significant business profile enhancement by reducing Solvay’s exposure to cyclical businesses with structural challenges

Strong industrial logic: creation of a world class PVC producer with low cost base and significant synergies potential

JV to improve Solvay’s financial metrics: REBITDA margin up by 170 bp (from 16.6% to 18.3%*) and increased CFROI

Exit mechanism at fair valuation

*2012 basis

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Enhancing Solvay’s business profile

*2012 basis

By Operating Segment*By Operating Segment*

1111Consumer

Chemicals

Advanced Materials

Performance Chemicals

Functional Polymers

Energy Services

44Consumer

Chemicals

Advanced Materials

Performance Chemicals

Functional Polymers

Energy Services

By region*By region* Latam

North America

Asia

Latam

Europe

Asia28%28% 32%32%

11%11%

Total 2012 net sales:€12,4 bn

North America

42%20%20%

10%10%

Total 2012 net sales:€10,5 bn

Europe

34%23%23%

5154

POST JVPRE JV

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safe harbour“To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a number of factors, including whether or not binding agreements will be reached between the parties and the final contents thereof, general economic factors, third party approvals, interest rate and foreign currency exchange rate fluctuations; changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals; regulatory approval processes, all-in scenario of R&D projects and other unusual items. Consequently, actual results or the implementation of the transaction may differ materially from the results or the transaction expressed or implied by such forward-looking statements or may not be achieved at all. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "believes," "may," "could" "estimates," "intends", "goals", "targets", "objectives", "potential", and other words of similar meaning. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update any forward-looking statements"

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