Eastman Chemical Company
) impending purchase of Missouri-based chemical company
) has been cleared by the latter's shareholders. This follows the
approval of the deal by the European Commission in May 2012.
Roughly 99% of the shareholders, who voted in a special meeting,
approved the deal.
With all regulatory conditions have been met, the transaction now
remains subject to the satisfaction or waiver of certain customary
closing conditions. The acquisition is expected to consummate in
the first week of July.
Eastman, in January 2012, landed a cash and stock deal worth $3.4
billion to acquire Solutia, a global leader in performance
materials and specialty chemicals. The move is a part of the
company's expansion strategy. Per the agreement, Solutia
stockholders will receive $22.00 in cash and 0.12 shares of Eastman
common stock for each Solutia share.
Solutia registered around 30% of sales in 2011 from Asia-Pacific.
Eastman believes that the takeover will help it to expand its
foothold in China. The company envisions the transaction to
immediately add to its earnings.
Annual cost synergies are expected to be roughly $100 million by
2013. Moreover, Eastman expects to realize significant tax benefits
from the acquisition. It also recognizes the potential for
meaningful revenue synergies by leveraging both companies'
technology and business capabilities and overlapping end-markets,
particularly in automotive and architecture.
Eastman'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
Eastman expects the global economy to grow slowly while volatility
in raw material and energy costs to subside in the near-term. The
company expects earnings to be roughly $5.30 a share in 2012. It
expects to benefit from the increased capacity additions as well as
the Solutia acquisition.
Eastman, which competes with
The Dow Chemical Company
E. I. du Pont de Nemours and Company
), holds a short-term Zacks #2 Rank (Buy). We currently have a
long-term Outperform recommendation on the stock.
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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