news of the week F E BRUARY 6, 201 2 E D I T E D BY W I L L I A M G. SC H UL Z & E MI LY BO NES
EASTMAN ACQUIRING SOLUTIA
SO LU T IA
tions, make up another 14% of Solutia’s sales. The balance of Solutia’s revenues came from its technical specialties business. This unit, SPECIALTIES: Eastman will see Solutia says, is the world’s largest strategic, geographic, and financial supplier of insoluble sulfur, used gains from the purchase as a rubber-vulcanizing agent. Excluding unusual items, Eastman earned $652 million last year IMING TO STRENGTHEN its business in sevon sales of $7.2 billion. It makes eral key market segments, broaden its range of polymers and solvents for the coattechnologies, and boost its Asia-Pacific presings, inks, and adhesives industries; ence, Eastman Chemical has signed an agreement to fibers such as acetate tow for cigarette filters; a variety of purchase Solutia in a transaction valued at $4.7 billion. specialty chemicals based on oxo and acetyl chemistries; Eastman says the combination of cash and stock it is and specialty polyester and cellulose polymers. offering represents a 42% premium over Solutia’s stock Eastman officials say Solutia will help Eastman make price at the close of the market on Jan. 26, the evening inroads into new markets. For instance, they say, Solubefore the deal was announced. Solutia had sales of just tia’s strength in the tire market will help Eastman launch under $2.1 billion in 2011 and, adjusting for extraordi- new hydrocarbon resin and cellulose ester technologies nary items, racked up earnings of $243 million. it has been developing to help boost tire performance. “This transaction provides Solutia’s shareholdEastman will supply Solutia businesses with raw maers with immediate value and an attractive premium, terials, which will help unlock the $100 million in annual as well as the opportunity to benefit from the future cost savings Eastman is targeting with the purchase. prospects of a leading global chemicals producer,” says Eastman makes or already buys eight of Solutia’s 10 bigSolutia’s CEO Jeffry N. Quinn. gest raw materials. Solutia was spun off from Monsanto in 1997. Legacy Solutia will also raise Eastman’s presence in Asian liabilities such as retirement benefits, environmental markets by about $1 billion, a 50% increase over its existremediation, and litigation ing business in the region. weighed on the company in “The combination of EastCLOSE FIT Deal will raise transportation’s its early years. Solutia filed man and Solutia results in share in Eastman’s revenues. for Chapter 11 reorganization a pretty compelling value,” in 2003 and emerged from Eastman’s CEO, James P. bankruptcy in 2008. Rogers, told analysts in a It has trimmed its portfoconference call. “From a stralio since declaring bankrupttegic standpoint, the complecy. The company divested mentary and adjacent end its stake in the Astaris phosmarkets, the combination of phates joint venture in 2005, technologies and business sold fine chemicals maker capabilities, and the acceleraCarbogen Amcis in 2006, tion of growth in Asia-Pacific, and unloaded its nylon unit, specifically China, all make it now known as Ascend Perforclear that Solutia is a strong mance Materials, in 2009. addition to Eastman.” Last year, 43% of Solutia’s Wall Street analysts are sales came from its interpositive about the deal for layer business, which makes the same reasons Rogers polyvinyl butyral (PVB) film noted. “Eastman appears to used in safety glass for car have taken a constructive windshields and building strategic step in agreeing windows. Performance films, to acquire Solutia,” wrote used for automotive window Jeffrey J. Zekauskas, a stock tinting, computer touch analyst with J.P. Morgan, to a Pro forma results for full-year 2011. SOURCE: Eastman screens, and other applicaclients.—ALEX TULLO
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Solutia’s plant in Sauget, Ill., where it makes rubber chemicals.
