Eastman to Sell Tire Additives Business Product Lines
09 June 2021 - 10:30PM
Business Wire
Eastman Chemical Company (NYSE:EMN) announced it has entered
into a definitive agreement with an affiliate of One Rock Capital
Partners, LLC (“One Rock”) to sell the rubber additives (including
Crystex™ insoluble sulfur and Santoflex™ antidegradants) and other
product lines and related assets and technology of the global tire
additives business of its Additives & Functional Products
segment. The sale does not include the Eastman Impera™ and other
performance resins product lines of the tire additives
business.
The total sale price of $800 million consists of $725 million
cash at closing and an additional amount of up to $75 million to be
paid based on performance of the rubber additives business
post-closing through 2023. The final purchase price is subject to
working capital and other adjustments at closing. The company
expects the sale will be either neutral or accretive to adjusted
earnings per share in 2022.
“This announcement is part of our ongoing effort to improve the
performance of our Additives & Functional Products segment.
After reviewing strategic options, we believe this action is the
most beneficial to Eastman and the rubber additives business,” said
Mark Costa, Board Chair and Chief Executive Officer. “We are
pleased to reach this agreement with One Rock and to have a clear
path forward for the rubber additives business. We continue to
evaluate other actions to improve our AFP segment.”
Tony W. Lee, Managing Partner of One Rock, said, “Eastman’s tire
additives business is the global leader, known for
high-performance, mission-critical products and technical
leadership. We are excited to partner with the business’ highly
experienced management team to further strengthen its unparalleled
product portfolio and drive its growth as an independent
company.”
The sale, subject to regulatory approvals and satisfaction of
other customary closing conditions, is expected to be completed in
the second half of 2021. The agreement contains customary
representations, warranties, and covenants of both parties
including, among other things, for Eastman to conduct the rubber
additives business in the ordinary course consistent with past
practice.
Beginning in the second quarter of 2021 and until sale, the
assets of the rubber additives business will be reported as held
for sale. The company expects to recognize asset impairments or a
loss from the agreement and completion of the sale.
Credit Suisse and JP Morgan served as financial advisors and
Jones Day served as legal advisor to Eastman.
Non-GAAP Financial Measures
Earnings in this release exclude certain non-core and unusual
items. “Adjusted net earnings attributable to Eastman” is net
earnings attributable to Eastman adjusted for non-core and unusual
items. “Adjusted earnings per share” is diluted earnings per share
attributable to Eastman adjusted for non-core and unusual items.
Reconciliations to the most directly comparable GAAP financial
measures and other associated disclosures, including a description
of the excluded and adjusted items, are available in the
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of the Forms 10-K and 10-Q filed
with the SEC for the periods for which non-GAAP financial measures
are presented.
Eastman's financial results forecasts do not include non-core,
unusual, or non-recurring items. Accordingly, management is unable
to reconcile projected full-year 2022 adjusted earnings per share
to projected GAAP earnings per share without unreasonable
efforts.
Forward-Looking Statements
This release includes forward-looking statements regarding
Eastman’s current expectations for the timing of completion of and
the total purchase price for the agreed sale of its rubber
additives business, the expected benefits of the sale, and
Eastman’s anticipated future financial and operating performance
and results. Such expectations are based upon certain preliminary
information, internal estimates, and management assumptions,
expectations, and plans, and are subject to a number of risks and
uncertainties inherent in projecting future conditions, events, and
results. Actual results could differ materially from expectations
expressed in the forward-looking statements if one or more of the
underlying assumptions or expectations prove to be inaccurate or
are unrealized. Important factors that could cause actual results
to differ materially from such expectations are and will be
detailed in the company’s filings with the Securities and Exchange
Commission (“SEC”), including the Quarterly Report on Form 10-Q for
the quarter ended March 31, 2021 that has been filed with the SEC
and future public disclosures about and related to the agreed sale
of the rubber additives business. Filings and other public
disclosures made by Eastman are available when filed with the SEC
and on the Eastman web site at www.eastman.com in the Investors
section.
About Eastman
Founded in 1920, Eastman is a global specialty materials company
that produces a broad range of products found in items people use
every day. With the purpose of enhancing the quality of life in a
material way, Eastman works with customers to deliver innovative
products and solutions while maintaining a commitment to safety and
sustainability. The company’s innovation-driven growth model takes
advantage of world-class technology platforms, deep customer
engagement, and differentiated application development to grow its
leading positions in attractive end-markets such as transportation,
building and construction, and consumables. As a globally inclusive
and diverse company, Eastman employs approximately 14,500 people
around the world and serves customers in more than 100 countries.
The company had 2020 revenues of approximately $8.5 billion and is
headquartered in Kingsport, Tennessee, USA. For more information,
visit www.eastman.com.
About One Rock Capital Partners, LLC
One Rock makes controlling investments in companies with
potential for growth and operational improvement using a rigorous
approach that utilizes highly experienced Operating Partners to
identify, acquire and enhance businesses in select industries. The
involvement of these Operating Partners affords One Rock the
ability to conduct due diligence and consummate acquisitions and
investments in all types of situations, regardless of complexity.
One Rock works collaboratively with company management and its
Operating Partners to develop a comprehensive business plan focused
on growing the enterprise and its profitability to enhance
long-term value. For more information, visit
www.onerockcapital.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210609005502/en/
Media: Tracy Kilgore Addington 423-224-0498 /
tracy@eastman.com
Investors: Greg Riddle 212-835-1620 / griddle@eastman.com
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