Eastman to Acquire Sterling Chemicals
June 22, 2011
Eastman Chemical Company has entered into a definitive merger agreement to acquire Sterling Chemicals, Inc., a single site North American petrochemical producer, for $100 million in cash, subject to modest deductions at closing as provided in the merger agreement, reports Business Wire. The transaction, which includes Sterling’s plasticizer and acetic acid manufacturing assets in Texas City, Texas, is expected to be accretive to Eastman’s full-year 2012 earnings per share in excess of Eastman’s cost of capital. Eastman plans to modify and restart Sterling’s currently idled plasticizer manufacturing facility to produce non-phthalate plasticizers, including Eastman 168™ non-phthalate plasticizers. This additional capacity will enable the company’s Performance Chemicals and Intermediates (PCI) segment to serve the growing market demand for non-phthalate alternatives. The acquisition also includes Sterling’s acetic acid production facility and its supply to BP Amoco Chemical Company under a long-term production agreement. The transaction, which has been approved by both boards of directors, is expected to be completed after receipt of required regulatory approvals, approval of Sterling’s stockholders, and satisfaction of other customary closing conditions. It is expected to be funded with available cash.