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Eastman to push growth in Asia with Solutia purchase

Jim Rogers, chairman and chief executive officer of Eastman

S speciality chemicals firm Eastman Chemical has bought Solutia, a global leader in performance materials and speciality chemicals, for US$4.7 billion, including the assumption of Solutia's debt. Eastman says the addition of Solutia will broaden its reach into Asia Pacific, where it expects to have an annual growth of 10% for the next several years.

Solutia makes polyvinyl butral (PVB) window interlayers and engineering resin-based performance films. It was also involved in nylon resin before selling off that business in 2009. Eastman produces Tritan-brand copolyester and other speciality resins, after having sold its PET resin business in the last few years.

Eastman has identified annual cost synergies of US$100 million that are expected to be achieved by year-end 2013. Key areas of value creation include the reduction of corporate costs, raw material synergies and improved manufacturing and supply chain processes.

Employing 3,000 staff globally, Solutia operates 23 manufacturing sites worldwide - including nine in the US, three in Germany, two each in Brazil, Belgium and the UK, as well as plants in Japan, Malaysia, China, Mexico and France. Eastman has a staff force of 10,000 worldwide and covers end markets ranging from packaging to medical to cosmetics.

Eastman recently posted its full-year 2011 sales revenue, which was US$7.2 billion and an increase of 23% year over year. The increase was primarily due to increased selling prices and higher sales volume. Selling prices increased in response to higher raw material and energy costs, primarily for propane, paraxylene, and wood pulp. The higher sales volume was primarily due to growth in PCI plasticiser product lines, the fourth-quarter 2010 restart of a previously idled olefins cracking unit at the Texas facility and strengthened end-use demand primarily for CASPI segment products.

Commenting on the outlook for first quarter and full year 2012, Eastman expects "strong results and benefits from recent capacity additions as well as the Sterling and Scandiflex acquisitions."

The company expects economic activity to accelerate in the second half of the year compared with the first half, particularly in the Asia Pacific and North American regions.

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