KINGSPORT, Tenn.--(BUSINESS WIRE)--Eastman Chemical Company (NYSE:EMN) today announced it has entered into a definitive agreement with Westlake Chemical Corporation for the sale of its polyethylene business. The sale will include Eastman's polyethylene and Epolene polymer businesses, related assets and the company's ethylene pipeline. The sale is for a purchase price of $255 million in cash at closing.
Closing is expected in the fourth quarter of 2006, subject to regulatory approval and customary conditions. The businesses and assets to be divested in this transaction generated approximately $680 million in revenue during 2005.
"Eastman has had a successful presence in the polyethylene businesses for decades," said Brian Ferguson, Eastman chairman and CEO. "While polyethylene is a strong business, Eastman has an uncompetitive ethylene position because of our older cracking facilities. In addition to divesting the polyethylene business to a buyer with a strong ethylene position, we will also take action to improve our olefins cost position. We maintain our commitment to our remaining olefin derivatives product lines at our Texas facility."
Included in the sale are three polyethylene manufacturing plants, an Epolene facility—all located at Eastman's Texas Operations in Longview—and an ethylene pipeline between Mont Belvieu, Texas, and the Texas Operations site. About 400 Eastman employees are associated with the polyethylene and Epolene businesses. Results from the polyethylene product lines are reported in the company's performance polymers segment, while results from the Epolene product lines are reported in the company's coatings, adhesives, specialty polymers and inks (CASPI) segment.
About 255 employees will remain with Eastman and continue producing polyethylene for Westlake. The two companies have an agreement that will allow continued operation of the Longview cracking facilities with a staged phase-out of older units beginning in 2007, allowing both companies to optimize the value of their respective olefin businesses under various market conditions.
"We are pleased to be working with a strong strategic player such as Westlake on this transaction," Ferguson said. "Westlake brings a history of success in the industry, and we look forward to further developing relationships with them as they become a part of the operating site and community in Longview."
Thomas J. Stevens, Eastman vice president and general manager of the performance polymers business, said customers can expect a smooth transition of business. "Eastman plans to continue doing business as we have until the sale is complete. We have long and valued relationships with our polyethylene customers, and we are committed to working closely with Westlake to ensure a smooth transition of these relationships."
Eastman manufactures and markets chemicals, fibers and plastics worldwide. It provides key differentiated coatings, adhesives and specialty plastics products; is the world's largest producer of PET polymers for packaging; and is a major supplier of cellulose acetate fibers. Founded in 1920 and headquartered in Kingsport, Tenn., Eastman is a FORTUNE 500 company with 2005 sales of $7 billion and approximately 12,000 employees. For more information about Eastman and its products, visit www.eastman.com.