Eastman Chemical can recall its past through photos -- it was once part of film giant Eastman Kodak. The company is a major producer of chemicals, fibers, and plastics. It is one of the world's largest suppliers of acetate tow for cigarette filters. Eastman's products go into such items as food and medical packaging, films, and toothbrushes. In 2012 Eastman acquired US-based chemicals firm Solutia in a $4.7 billion cash-and stock deal. With the addition of Solutia, Eastman becomes a top-tier specialty chemicals company. Its products include rubber materials, specialty polymers (synthetic plastics), solvents, adhesives, plasticizers (additives to soften plastics such as PVC), and specialty fluids.
Eastman Chemical has operations worldwide, although North America still accounts for just more than half of sales. It has continually expanded internationally -- even through the global recession of 2008-2009 -- by building plants, acquiring businesses, and expanding existing facilities in Asia, Europe, and Latin America.
The Solutia purchase not only broadens Eastman Chemicals' portfolio but also its geographic reach. The addition is a significant step in the company's growth strategy, particularly in the Asia/Pacific region and other emerging markets, and the company expects the transaction to accelerate the expansion of its businesses worldwide.
With the acquisition, Eastman restructured its business units into five operating segments. Its Additives and Functional Products segment consists of rubber materials, specialty polymers, and solvents. The Adhesives and Plasticizers segment contains adhesives, intermediates, and plasticizer product lines. Its Advanced Materials segment includes specialty plastics, performance films, and advanced interlayers (polyvinyl butyral, or PVB, sheet used in glass manufacturing). The company's Fibers segment consists of the acetate tow and textile fibers units. Eastman's oxo and acetyl intermediates products and Solutia's specialty fluids products combined to make the Specialty Fluids and Intermediates segment.
The company's operations posted sales of $7.2 billion in 2011, a 23% increase in overall revenues over the previous year. Eastman also recorded a net income of $696 million, representing a 58% hike over the previous year. The gains resulted mainly from higher prices and higher sales volumes. Higher prices came from higher raw material and energy costs, particularly for propane, paraxylene, and wood pulp. Growth in its PCI segment plasticizer product lines and the restart of an idled olefins cracking unit in Texas helped drive higher sales volumes.
The company continued its organic growth initiative in 2011 with plans to expand its Specialty Plastics, CASPI, and PCI segments The move set the stage for significant new production capacity in its facilities in Tennessee, Pennsylvania, and in the Netherlands, beginning in late 2011 and early 2012.
The company also continued to expand via M&A, acquiring Houston-based Sterling Chemicals for $100 million in 2011. Sterling, which produces mostly acetic acid for sale to BP, closed its plasticizers facility after German chemical manufacturer BASF Corporation terminated a major contract in 2010. Eastman plans to restart Sterling's plasticizers manufacturing plant, where it intends to produce its own line of non-phthalate plasticizers, Eastman 168, for its PCI segment. The non-phthalate plasticizers, used to soften vinyl, are an alternative to phthalates, which have seen restrictions because of safety concerns.
For its CASPI segment, Eastman completed a 20% expansion of its hydrogenated hydrocarbon resins manufacturing capacity in 2011. That year Eastman also bought Dynaloy, a specialty chemical company in Indianapolis. Dynaloy sells cleaning products used in the manufacture of semiconductors, and the acquisition supports Eastman's efforts to expand its CASPI segment.
Also in 2011, Eastman agreed to sell its Texas-based TX Energy unit to Zero Emission Energy Plants. The TX Energy facility, still under development, will convert petroleum coke, an oil refining waste product, into hydrogen and pipeline-quality carbon dioxide. That year Eastman subsidiary Eastman Renewable Materials acquired Chicago-based TetraVitae Bioscience, which develops renewable chemicals such as bio-based butanol and acetone.
Eastman Chemicals completed its exit of its Performance Polymers segment in 2011 by selling its polyethylene terephthalate (PET) business to DAK Americas, LLC for about $600 million. Eastman Chemicals had been a top producer of PET, a plastic used to make packaging for soft drinks, food, and water. – less