Eastman: Sale of tyre additives business product lines to One Rock
Eastman Chemical Company announced it has entered into a definitive agreement with an affiliate of One Rock Capital Partners, LLC to sell the rubber additives (including Crystex insoluble sulfur and Santoflex antidegradants) and other product lines and related assets and technology of the global tyre additives business of its Additives & Functional Products segment. The sale does not include the Impera and other performance resins product lines of the tyre additives business.
The total sale price of USD 800 million consists of USD 725 million cash at closing and an additional amount of up to USD 75 million to be paid based on performance of the rubber additives business post-closing through 2023. The final purchase price is subject to working capital and other adjustments at closing. The company expects the sale will be either neutral or accretive to adjusted earnings per share in 2022.
"This announcement is part of our ongoing effort to improve the performance of our Additives & Functional Products segment. After reviewing strategic options, we believe this action is the most beneficial to Eastman and the rubber additives business," said Mark Costa, Board Chair and Chief Executive Officer. "We are pleased to reach this agreement with One Rock and to have a clear path forward for the rubber additives business. We continue to evaluate other actions to improve our AFP segment."
Tony W. Lee, Managing Partner of One Rock, said: "Eastman's tyre additives business is the global leader, known for high-performance, mission-critical products and technical leadership. We are excited to partner with the business' highly experienced management team to further strengthen its unparalleled product portfolio and drive its growth as an independent company."
The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, is expected to be completed in the second half of 2021. The agreement contains customary representations, warranties, and covenants of both parties including, among other things, for Eastman to conduct the rubber additives business in the ordinary course consistent with past practice. Beginning in the second quarter of 2021 and until sale, the assets of the rubber additives business will be reported as held for sale. The company expects to recognise asset impairments or a loss from the agreement and completion of the sale.