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Eastman to Acquire Genovique Specialties, a Leading Producer of Non-Phthalate Plasticizers

Published on 2010-03-23. Author : SpecialChem

KINGSPORT, Tenn. -- Eastman Chemical Company announced that it has entered into a definitive agreement to acquire Genovique Specialties Corporation, a leading global producer of specialty plasticizers, benzoic acid, and sodium benzoate. The acquisition will establish Eastman as a global leader in non-phthalate plasticizers for both general purpose and specialty markets. Terms of the transaction were not disclosed.

The transaction is expected to be accretive to Eastman's full-year 2010 earnings per share. Following the completion of the transaction, Genovique Specialties, including its manufacturing operations in Chestertown, Md., Kohtla-Järve, Estonia, and its joint venture in Wuhan, China, will become part of Eastman's Performance Chemicals and Intermediates (PCI) segment.

"Eastman continues to execute its strategy to grow the company through strategic uses of cash. This acquisition aligns with Eastman's strategic goals of investing in differentiated, sustainably-advantaged products and diversifying into emerging geographies," said Jim Rogers, president and CEO. "We look forward to delivering on the benefits this transaction creates for our customers and stockholders alike."

Regulatory changes and shifting consumer preferences are driving rising demand for non-phthalate solutions in the approximately $9 billion world-wide plasticizer market. This growing demand for non-phthalate alternatives is expected to increase volumes of non-phthalate plasticizers at a compounded annual rate of 7% over the next five years in North America and Europe. Demand is also increasing in emerging markets for products manufactured for export to developed countries, where regulations favor the use of non-phthalate plasticizers.

Eastman is currently a supplier in North America and Europe of general purpose non-phthalate plasticizers for flexible PVC applications. With 2009 revenues of approximately $135 million, Genovique Specialties is a global producer of specialty non-phthalate plasticizers based on benzoic acid for water based adhesives, a new product line for Eastman. Genovique's production and distribution capabilities and customer relationships in Europe and Asia also enhance Eastman's diversification in regions targeted for growth.

"Genovique Specialties is a strategic addition that will allow us to grow our attractive plasticizer product lines," said Ron Lindsay, executive vice president, performance polymers and chemical intermediates. "With Genovique, we will be better able to meet our customers' demands for non-phthalates while also expanding Eastman's presence in a high-growth, high-margin segment of the plasticizer market."

The acquisition is expected to be completed after receipt of required regulatory approvals and satisfaction of other customary closing conditions. It is expected to be funded with available cash. The Valence Group acted as exclusive financial advisor to Eastman on this transaction.

Eastman's chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions. The company is committed to finding sustainable business opportunities within the diverse markets it serves. A global company headquartered in Kingsport, Tenn., USA, Eastman had 2009 sales of $5 billion.

Forward-Looking Statements

This news release includes forward-looking statements concerning the agreement to acquire Genovique Specialties, including Eastman's expected competitive position in the market for non-phthalate plasticizer products after the acquisition, the expected impact of the acquired product lines on 2010 earnings per share, projected market demand and volume increases for non-phthalate plasticizer products, and expected completion and source of funding of the acquisition. 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, including the Form 10-K filed for 2009 and available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Source: Eastman


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