According to Reuters,
Eastman Chemical Company
) received approval from the European Commission for the purchase
of chemical company
). As per the commission, the deal would leave the merged entity
with strong competition in the market for polyvinyl butyral (PVB)
Eastman's move to acquire Solutia - a global leader in
performance materials and specialty chemicals - is a part of its
expansion strategy. The company announced its plan to acquire
Solutia for $3.4 billion in cash and stock in January 2012. The
transaction is expected to close in mid-2012. Eastman believes that
the acquisition will help the company expand its foothold in China.
The company expects the transaction to be immediately accretive to
Last month, Eastman released its financial results for the first
quarter of 2012. The company reported first-quarter 2012 earnings
of $1.13 per share, a decline from $1.39 per share a year ago.
Excluding costs associated with its imminent acquisition of Solutia
and one-time gains, the Tennessee-based chemical company earned
$1.22 a share in the quarter, which topped the Zacks Consensus
estimate of $1.14.
Revenues rose 4% year over year to $1,821 million, but missed
the Zacks Consensus Estimate of $1,881 million. The growth was
aided by increased selling prices.
Eastman Chemical expects the global economy to grow slowly while
volatility in raw material and energy costs would diminish in the
near-term. The company expects earnings for 2012 to be roughly
$5.30 a share. It expects to benefit from the increased capacity
additions as well as the Solutia acquisition.
Eastman Chemical's diversified chemical portfolio, along with
its integrated and diverse downstream businesses, is driving
earnings. The company benefits from business restructuring and
cost-cutting measures. It has sold unprofitable units and closed
down the poorly performing ones.
The company, which competes with
The Dow Chemical Company
E. I. du Pont de Nemours and Company
), holds a short-term Zacks #3 Rank (Hold). We currently have an
"Outperform" recommendation on the shares of Eastman Chemicals.
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis Report
EASTMAN CHEM CO (EMN): Free Stock Analysis
SOLUTIA INC (SOA): Free Stock Analysis Report
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