The wild west mentality of corporate deal-making


How does a company’s valuation jump 50% in one day? When another company is crazy enough to buy it for that amount. In the latest example of questionable deals, Solvay (a Belgian chemical and plastics company) agreed to pay a 50% premium to buy chemical company Rhodia. How do Solvay shareholders feel about this move? Hmmmmmm…

Either Solvay knows something that has somehow remained hidden from the rest of the world, or:

  1. Christian Jourquin wants to run a bigger company and earn even more money
  2. This move is strategic and done on the belief that whatever specialty chemicals Rhodia make will soon become scarce (hey, occasionally deals have valid reasons behind them…even if they have nothing to do with why the move was made)
  3. Solvay Senior Management thought it would be cool to own a company in a city with a hyphenated name (Boulogne-Billancourt, home of Rhodia HQ)
  4. Solvay found itself with a lot of cash and thought “look at all this cash – our management team and systems must be brilliant – let’s lend our brilliance to decidedly less brilliant management teams”

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