8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report: February 28, 2010

SOLUTIA INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

001-13255	43-1781797
(Commission File Number)	(IRS Employer Identification No.)
575 Maryville Centre Drive, P.O. Box 66760 St. Louis, Missouri	63166-6760
(Address of Principal Executive Offices)	(Zip Code)

(314) 674-1000
(Registrant’s Telephone Number, Including Area Code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

     On February 28, 2010, Solutia Inc. (“Solutia”) entered into a Share Purchase Agreement (the “SPA”), between Etimex Holding GmbH, a limited liability company formed under the laws of Germany (“Seller”), Etimex Primary Packaging GmbH, a limited liability company formed under the laws of Germany (“Guarantor”), Solutia and Flexsys Verwaltungs- und Beteiligungsgesellschaft mbH, a limited liability company formed under the laws of Germany and a wholly-owned subsidiary of Solutia (“Purchaser”).

     Under the SPA Purchaser has agreed to purchase from Seller all of the outstanding shares of Etimex Solar GmbH (the “Target”), which would through this purchase, include the indirect purchase of Target’s wholly-owned subsidiary (Target and such subsidiary collectively, “Solar”), on the terms and subject to the conditions set forth in the SPA. The purchase of the outstanding shares pursuant to the SPA is referred to as the “Purchase”. Upon the closing of the Purchase, the Target and its subsidiary will each become an indirect wholly-owned subsidiary of Solutia. Solar is engaged in the business of designing, developing, manufacturing and distributing specialty films and products for the encapsulation of solar cells, thin film solar coatings and other active semiconductor materials in photovoltaic solar modules and any other related applications.

     The purchase price for the Purchase is €240 million, which amount is subject to adjustment as provided in the SPA for, among other items, the amount of cash, financial debt and working capital of Solar as of the closing of the Purchase.

     The SPA provides that the closing of the Purchase is subject to customary conditions. In particular, neither party is required to close the Purchase until the closing is permissible under the merger control or antitrust requirements of applicable countries. In addition, Purchaser’s obligations to consummate the Purchase is subject to the absence of a “Material Adverse Effect” on Solar since the date of the SPA. A “Material Adverse Effect” is defined in the SPA to mean any fact, circumstance, development, effect or change that is, has been or would reasonably be expected to be, individually or in the aggregate, materially and lastingly adverse to the business, assets, financial condition, operating results or operations of Solar, without taking into account certain excluded items.

     The SPA may be terminated by Seller or Guarantor (on the one hand) and Solutia or Purchaser (on the other hand) if either (i) the closing of the Purchase has not occurred by September 2, 2010, which date may be extended until November 2, 2010 if certain conditions have not been satisfied as of September 2, 2010, or (ii) a party to the SPA has failed to close the Purchase when all of the closing conditions as set forth in the SPA have been satisfied or waived (other than those closing conditions that, by their nature, are to be fulfilled at the closing of the Purchase) and the parties are required to close the Purchase, which right may be exercised only after the terminating party has delivered notice to the other party of its failure to close the Purchase and provided the other party with the right to close the Purchase within a cure period thereafter.

     The SPA includes customary representations, warranties and covenants of Seller, Guarantor, Solutia and the Purchaser, including representations and warranties regarding Solar.

     The SPA includes certain post-closing indemnification obligations of the parties to the SPA, including indemnification obligations for damages resulting from breaches of representations, noncompliance with covenants and liabilities that are excluded liabilities of Solar under the SPA (which primarily include certain liabilities not related to Solar’s solar business). These indemnifications are subject to limitations as provided in the SPA. The indemnification obligations lapse over time, with all indemnification obligations expected to have lapsed after 5 years from the date of the SPA. Many of the indemnification obligations are subject to maximum aggregate collectible amount limitations.

     The SPA also includes other customary pre-closing and post-closing covenants of the parties. These include a restriction on Seller, Guarantor or any of their subsidiaries from competing with Solar by engaging in any aspect of Solar’s solar business for 3 years after the closing of the Purchase.

     The purchase price is expected to be financed from Solutia’s existing cash, as well as debt. In connection with the SPA, Solutia has entered into an agreement to obtain debt financing to fund the acquisition of Solar subject to closing conditions including with respect to the financial condition of Solar. The SPA does not include a financing condition.

Item 7.01. Regulation FD.

     A copy of the press release announcing the execution of the SPA is attached as Exhibit 99.1 to this Current Report on Form 8-K. Solutia will hold a live webcast at 9:00 a.m. Central Time on Monday, March 1, 2010 regarding the SPA. A live webcast of the presentation, as well as a replay, will be available on the investors section of http://www.solutia.com. In connection therewith, Solutia has posted information regarding the planned acquisition of Solar to the “investors” section of Solutia’s website under “reports and presentations — financial reports & presentation”. This information includes January 2010 financial and operational information regarding Solutia.

Item 9.01. Financial Statements and Exhibits.

     Financial statements of Solar are not included as an exhibit to this Current Report on Form 8-K, but will be provided within 71 calendar days of the filing of this Current Report on Form 8-K.

     (d) Exhibits.

Exhibit Number		Description
	99.1	Press Release of Solutia Inc., dated March 1, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 1, 2010

SOLUTIA INC.
By:	/s/ Paul J. Berra, III
	Name:	Paul J. Berra, III
	Title:	Senior VP, Legal and Governmental Affairs, and General Counsel

EXHIBIT INDEX

Exhibit Number		Description
	99.1	Press Release of Solutia Inc., dated March 1, 2009.

EX-99.1

Exhibit 99.1

Media: Melissa Zona (314) 674-5555
Investors: Susannah Livingston (314) 674-8914

Solutia Announces Agreement to Acquire Etimex Solar
Uniquely positions Solutia as a global provider of both major encapsulants to the fast-growing
photovoltaics industry

ST. LOUIS, March 1, 2010 — Solutia Inc. (NYSE: SOA) today announced that it has reached a definitive agreement to purchase Etimex Solar GmbH, a wholly owned subsidiary of Etimex Holding GmbH, which is controlled by funds affiliated with Alpha Gruppe. The purchase price of €240 million in cash is expected to be financed from existing cash on the balance sheet and additional debt. Etimex Solar is a leading supplier of ethylene vinyl acetate (EVA) encapsulants to the photovoltaic market. The acquisition is a significant step in Solutia’s plan to strategically grow its specialty chemicals and performance materials portfolio by enhancing its current businesses.

     Combining EVA with its existing polyvinyl butyral (PVB) encapsulant capabilities positions Solutia as the world’s only one-stop source for solar encapsulant solutions. This will enable Solutia to better meet customer needs by providing the broadest product offering in the industry. In addition, Saflex’s processing expertise, global commercial capabilities, and technology resources will enable rapid expansion in the photovoltaic market. Additional immediate benefits include:

     o Diversification and expansion of end markets

     o Enhancement of Solutia’s already strong EBITDA margins

     o Enhancement of Solutia’s position as a leading components supplier to the high-growth renewable energy sector

     o Product development and commercial synergies

-2-

     “This acquisition is a solid step forward that strengthens our core competencies, expands our end markets and supports Solutia’s growth strategy,” said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. “Renewable energy is an acknowledged source of long-term growth that fits well with Solutia’s businesses, and the combination of EVA and PVB encapsulant manufacturing capabilities will result in access to additional opportunities. I am extremely excited about Etimex Solar and the role it will play in Solutia’s future success.”

     Etimex’s VistaSolar^® products, manufactured in Dietenheim, Germany, offer ultra fast curing EVA films as well as new thermoplastic polyurethane (TPU) films which do not require the necessity of curing. This business reported 2009 net income of $31 million and 2009 EBITDA of approximately $34 million. This transaction is expected to close during the second quarter of 2010, contingent upon customary closing conditions, including receipt of governmental approvals. Deutsche Bank Securities Inc. and Kirkland & Ellis LLP acted as advisors on this transaction.

     The company will hold a conference call at 9:00 a.m. Central Time on Monday, March 1, 2010, during which Solutia executives will elaborate on the strategic fit and financial aspects of the transaction. A live webcast of the presentation, as well as a replay, will be available on the investors section of http://www.solutia.com. The phone number for the call is 888-713-4214 (U.S.) or 617-213-4866 (International), and the pass code is 39848800. A replay of the event will be available through www.solutia.com for two weeks or by calling 888-286-8010 (U.S.) or 617-801-6888 (International) and entering the pass code 11811324.

-3-

Use of Non- GAAP Financial Information and Reconciliation to Comparable GAAP Number

     For the purpose of this press release, the company has used EBITDA (defined as earnings from continuing operations before interest expense, income taxes, depreciation and amortization, less net income attributable to non-controlling interests, and reorganization items, net) which is not determined in accordance with generally accepted accounting principles. The company believes that EBITDA is useful to investors because they facilitate period-to-period comparisons of Solutia’s performance and enable investors to assess the company’s performance in the way that management and lenders do. Below is a reconciliation of EBITDA to net income for Etimex Solar GmbH. For purposes of calculating EBITDA no taxes or interest expenses are attributed to Etimex Solar as these items were attributed to its parent company.

Reconciliation of Net Income to EBITDA

Etimex Solar GmbH	Twelve Months
	Ended
	December 31,
(dollars in millions)	2009
Net Income	$	31
Plus:
Depreciation and Amortization	$	3
EBITDA	$	34

Note: Etimex Solar GmbH results are reported in accordance with German GAAP. We do not believe results would have been materially different under U.S. GAAP.

# # #

-4-

NOTE TO EDITORS: Solutia and Saflex are trademarks of Solutia Inc. and/or its subsidiaries. Etimex Solar is a trademark of Etimex Holding GmbH. Etimex is a trademark of Etimex Holding GmbH and VistaSolar is a trademark of Etimex Solar GmbH.

Dollar amounts herein regarding Etimex Solar were converted with a USD to Euro exchange rate of 1.39.

Forward Looking Statements

This press release contains forward-looking statements, including, but not limited to statements about projected financial performance, which can be identified by the use of words such as “believes,” “expects,” “may,” “will,” “intends,” “plans,” “estimates” or “anticipates,” or other comparable terminology, or by discussions of strategy, plans or intentions. These statements are based on management’s current expectations and assumptions about the industries in which Solutia operates and Solutia’s ability to raise additional funds which is subject to market conditions. These statements are subject to the satisfaction of closing and market conditions. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risk and uncertainties regarding the consummation of the transactions described in this press release or the timing thereof, including the possibility that the conditions to consummating the transactions may not be satisfied or that the transactions may not close, the accuracy of our assumptions, the ability of third parties to finance an acquisition, and those risk and uncertainties described in Solutia’s most recent Annual Report on Form 10-K, including under “Cautionary Statement About Forward Looking Statements” and “Risk Factors”, and Solutia’s quarterly reports on Form 10-Q. These reports can be accessed through the “Investors” section of Solutia’s website at www.solutia.com. Solutia disclaims any intent or obligation to update or revise any forward-looking statements in response to new information, unforeseen events, changed circumstances or any other occurrence.

Corporate Profile

Solutia is a market-leading performance materials and specialty chemicals company. The company focuses on providing solutions for a better life through a range of products, including: Saflex^® interlayer for laminated glass; CPFilms^® aftermarket window films sold under the LLumar^® brand and others; and technical specialties including the Flexsys^® family of chemicals for the rubber industry, Skydrol^® aviation hydraulic fluid and Therminol^® heat transfer fluid. Solutia’s businesses are world leaders in each of their market segments. With its headquarters in St. Louis, Missouri, USA, the company operates globally with approximately 3,100 employees in more than 50 locations. More information is available at www.Solutia.com.

Source: Solutia Inc.
St. Louis
3/1/10