Belgian specialty chemical maker Solvay has agreed to acquire New Jersey-based Cytec Industries for $5.5 billion.

Solvay, which expects the deal to be finalized by year-end, will pay $75.25 per Cytec share, a premium of 28.9% over Cytec’s closing price on July 28, the day before the deal was announced.

Cytec has about $2 billion in annual sales, two-thirds of which come from carbon fiber composite materials used by the aerospace and automotive industries. The firm’s other activities include mining chemicals, niche additives, and phosphine specialty chemicals.

Solvay’s sales in 2014 approached $13 billion. Its product lines include advanced materials such as specialty polymers, inorganic chemicals including soda ash, and personal care product ingredients. It sees opportunities to offer customers composite systems that combine its polymers with carbon fiber supplied by Cytec.

“The proposed acquisition of Cytec marks a major step change in Solvay’s portfolio upgrade,” said Solvay CEO Jean-Pierre Clamadieu. “It is a unique opportunity for Solvay to supply advanced materials to aerospace and automotive manufactures to make their vehicles lighter.”

The deal is “expensive but probably worth it,” analysts at the investment firm Jefferies say in a report to clients. Although the companies do overlap, Solvay focuses on the automotive industry and Cytec is strong in aerospace, they note. According to the analysts, the composites market is growing by about 10% annually.

Solvay expects more than $110 million in annual synergies within three years as a result of combining the two companies. One-off merger costs will total about $80 million.

The acquisition is another step in Solvay’s transition toward higher-value markets. The company bought specialty chemical maker Rhodia in 2011 for $4.8 billion and in recent months put its polyvinyl chloride business into Inovyn, a joint venture with Ineos.

Cytec has also been off-loading less profitable businesses. The firm sold its building block chemical business in 2011 for $180 million and its coatings resins business in 2013 for nearly $1.2 billion.

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