Eastman to sell composites business

KINGSPORT, Tenn. and NEW YORK – Eastman Chemical Co. has agreed to sell certain businesses and product lines in its coatings, adhesives, specialty polymers and inks (CASPI) segment to private investment firm Apollo Management, L.P., according to an Eastman press release today.

Eastman Chemical – which supplies the marine industry with unsaturated polyester resins and vinyl ester resins – agreed to a purchase price of $215 million, subject to regulatory approval and other customary closing conditions.

The purchase price includes cash of $165 million at closing, plus a $50 million note payable to Eastman. The companies anticipate a closing by the end of July 2004, Eastman said.

“We’re pleased to announce this agreement with Apollo,” said Brian Ferguson, Eastman’s chairman and CEO. “We will be working closely with our customers to ensure a smooth transition as we move toward the closing of this transaction. Completing this divestiture is a significant step forward in Eastman’s ongoing strategy to improve the company’s profitability.”

However, just because Eastman Chemical is getting out of the composites business, it isn’t necessarily out of the marine industry, a spokesperson explained in an interview today. Eastman will continue to manufacture adhesives and chemicals for paints that may be used by recreational boating firms.

The following Eastman businesses and product lines are included in the divestiture: acrylate ester monomers, composites (unsaturated polyester resins), inks and graphics arts raw materials, liquid resins, powder resins and textile chemicals. Eastman said it had announced plans in August 2003 to restructure, divest or consolidate these businesses and product lines.

Manufacturing sites to be divested include: Pleasant Prairie, Wis.; LaVergne, Tenn.; Carpentersville, Ill.; Roebuck, S.C.; Lynwood, Calif.; Columbus and Forest Park, Ga.; and Ennis, Texas, in the United States. Sites outside the U.S. include: Kallo, Belgium; Sant’ Albano and Cola’ di Lazise, Italy; Molndal, Sweden; Hamburg, Germany; Sokolov, Czech Republic; and Tianjin, Nanping and Funing, People’s Republic of China.

Approximately 2,100 employees are currently associated with this portion of Eastman’s CASPI segment. Upon closing of the acquisition, these employees will become employees of the new owner, Eastman said.

“We are excited about this opportunity to own a business that is an important manufacturer and marketer of products sold into the coatings, composites, inks and textile businesses,” said Josh Harris, founding partner at Apollo Management. “These sectors should exhibit attractive growth in the future, and Apollo looks forward to working with the employees to allow this new company to realize its full potential.”

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