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Eastman to acquire Sterling Chemicals
24
Jun '11
Eastman Chemical Company announced that it has entered into a definitive merger agreement to acquire Sterling Chemicals Inc, a single site North American petrochemical producer, for $100 million in cash, subject to modest deductions at closing as provided in the merger agreement. The transaction, which includes Sterling's plasticizer and acetic acid manufacturing assets in Texas City, Texas, is expected to be accretive to Eastman's full-year 2012 earnings per share in excess of Eastman's cost of capital.

Eastman plans to modify and restart Sterling's currently idled plasticizer manufacturing facility to produce non-phthalate plasticizers, including Eastman 168 non-phthalate plasticizers. This additional capacity will enable the company's Performance Chemicals and Intermediates (PCI) segment to serve the growing market demand for non-phthalate alternatives. In the North American and European non-phthalate plasticizers markets, total sales volume is expected to increase at a compounded annual rate of approximately seven percent over the next five years.

“This acquisition supports our growth strategy for our plasticizer product line, and will enable us to keep pace with the growing demand for non-phthalate alternatives, like our Eastman 168™,” said Ron Lindsay, executive vice president, performance chemicals and intermediates, and fibers. “We look forward to working with Sterling employees as we bring this additional capacity online and continue to grow this business.”

The acquisition also includes Sterling's acetic acid production facility and its supply to BP Amoco Chemical Company under a long-term production agreement.

The transaction, which has been approved by both boards of directors, is expected to be completed after receipt of required regulatory approvals, approval of Sterling's stockholders, and satisfaction of other customary closing conditions. It is expected to be funded with available cash. Oppenheimer & Co. Inc. is acting as exclusive financial advisor to Eastman on this transaction and Eastman's legal counsel is Jones Day.

Sterling Chemicals, Inc. is a leading North American producer of selected petrochemicals used to manufacture a wide array of consumer goods and industrial products throughout the world. Its primary product is acetic acid.

Acetic acid is a clear, colorless, mobile liquid with a pungent odor and acidic taste. It is used primarily to manufacture vinyl acetate monomer, or VAM, which is a mature market with growth around GDP levels. VAM is used in a variety of end products, including adhesives, textiles, paints and paper.

Eastman Chemical Company


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