Solutia Acquisition Will Increase Growth Rate for Eastman in Asia Pacific

February 2nd, 2012 by Editor

by Sahely Mukerji,

Eastman Chemical Co. officials consider the recent acquisition of Solutia Inc. of St. Louis, an important step in Eastman’s strategy to extend its global presence in emerging markets, in particular in Asia Pacific, says Tracy Broadwater, corporate communications manager of Eastman. “By leveraging infrastructure in the region, Eastman expects to have a compound annual growth rate in Asia Pacific approaching 10 percent for the next several years,” she says. 

Solutia is a manufacturer of performance materials and specialty chemicals, primarily in the construction, transportation, energy and manufacturing markets.

The time was ripe for the acquisition, Broadwater says. “Solutia is a good investment that is well-managed with well-established businesses,” she says. “Eastman has been aggressively pursuing a growth strategy, and acquisitions have been an important part of that strategy. We have made a number of acquisitions over the past two years, and though this is the largest of those, we are approaching this acquisition from a position of strength.” 

None of those acquisitions were in the glass and glazing industry, Broadwater clarifies. 

Currently, Eastman is one of the largest companies in its field with a combined EBITDA margin of approximately 20 percent and an EBITDA of approximately $1.8 billion. “This acquisition will strengthen Eastman as a top-tier North American chemical company,” Broadwater says. 

Regarding changes at Solutia as a result of the acquisition, Broadwater says “recognizing that we haven’t even closed on the deal at this point, it would be premature to comment until we are further in the process.” The transaction is expected to close in mid-2012. “Due to the size of this acquisition we expect a great deal of our focus will be spent integrating Solutia into Eastman,” she says. “However, we expect to continue to evaluate appropriate opportunities for expansion on a number of fronts, including emerging markets, access to feedstock, differentiated products or markets and sustainability, which have been Eastman’s key focus areas for M&A [marketing and analysis] opportunities.”

The transaction also is “expected to deliver immediate value to our stockholders in the form of accretion and strong cash generation, as well as create potential upside through the combination of two leading global chemical companies,” says Jim Rogers, chairman and CEO of Eastman, in a company release. Under the terms of the agreement, Solutia stockholders will receive $22 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Based on recent closing prices, Solutia shareholders will receive cash and stock valued at $27.65 per Solutia common share, representing a premium of 42 percent and a total transaction value of approximately $4.7 billion, including the assumption of Solutia’s debt.

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  1. It has been very interesting to watch the sales of the Llumar brand company, from the days when Martin Processing started manufacturing their Llumar brand. In those days one could communicate with the owner or his wife.
    Over the last fify years the business has changed hands half a dozen times.
    Each time the business changes hands, we the window film operator go futher and futher away from the people who call all the shots, and land up being an account number.
    Over the years the company has become more and more difficult to deal with and the prices have become uncompetitive.
    Their attitude has also changed because they think they are they only company that can make quality films I got some interesting facts to show them..
    Nobody really cares as each worker is only a number and the personal attention has dissapeared. This is my experienced and I was their exclusive distributor for Southern Africa for seventeen years. I can go on and on, but I won’t bore you with any more details.
    It will be more interesting to see how things are going to pan out in the future for them ,however my guess is,this is going to be a tough ride as everbody is chasing their share of the market.
    Leon Levy Klingshield South Africa

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