Eastman Chemical Co. officials consider the recent acquisition of Solutia Inc. of St. Louis, an important step in Eastman’s strategy to extend its global presence in emerging markets, in particular in Asia Pacific, says Tracy Broadwater, corporate communications manager of Eastman. “By leveraging infrastructure in the region, Eastman expects to have a compound annual growth rate in Asia Pacific approaching 10 percent for the next several years,” she says. 

Solutia is a manufacturer of performance materials and specialty chemicals, primarily in the construction, transportation, energy and manufacturing markets.

The time was ripe for the acquisition, Broadwater says. “Solutia is a good investment that is well-managed with well-established businesses,” she says. “Eastman has been aggressively pursuing a growth strategy, and acquisitions have been an important part of that strategy. We have made a number of acquisitions over the past two years, and though this is the largest of those, we are approaching this acquisition from a position of strength.” 

None of those acquisitions were in the glass and glazing industry, Broadwater clarifies. 

Currently, Eastman is one of the largest companies in its field with a combined EBITDA margin of approximately 20 percent and an EBITDA of approximately $1.8 billion. “This acquisition will strengthen Eastman as a top-tier North American chemical company,” Broadwater says. 

Regarding changes at Solutia as a result of the acquisition, Broadwater says “recognizing that we haven’t even closed on the deal at this point, it would be premature to comment until we are further in the process.” The transaction is expected to close in mid-2012. “Due to the size of this acquisition we expect a great deal of our focus will be spent integrating Solutia into Eastman,” she says. “However, we expect to continue to evaluate appropriate opportunities for expansion on a number of fronts, including emerging markets, access to feedstock, differentiated products or markets and sustainability, which have been Eastman’s key focus areas for M&A [marketing and analysis] opportunities.”

The transaction also is “expected to deliver immediate value to our stockholders in the form of accretion and strong cash generation, as well as create potential upside through the combination of two leading global chemical companies,” says Jim Rogers, chairman and CEO of Eastman, in a company release. Under the terms of the agreement, Solutia stockholders will receive $22 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Based on recent closing prices, Solutia shareholders will receive cash and stock valued at $27.65 per Solutia common share, representing a premium of 42 percent and a total transaction value of approximately $4.7 billion, including the assumption of Solutia’s debt.

Officials at Eastman Chemical Co. of Kingsport, Tenn., and Solutia Inc. of St. Louis, have entered into a definitive agreement, under which Eastman will acquire Solutia. Under the terms of the agreement, Solutia stockholders will receive $22 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock.

“Solutia board of directors has agreed to a merger with Eastman Chemicals for an enterprise value of approximately $4.7 billion,” says Melissa H. Zona, director of corporate communications at Solutia. “Eastman’s offer represents a substantial premium for our shareholders. The agreement calls for the merger of the companies, which Solutia’s board of directors unanimously recommends be adopted by its shareholders.”

The merger creates a company with combined revenues of about $9.3 billion, Zona says. 

“The merger is financially compelling for Solutia’s shareholders, delivering immediate value and enabling investors to benefit over the long term from the combined company’s growth,” Zona adds. Solutia shareholders will receive cash and stock valued at $27.65 per Solutia common share, representing a premium of 42 percent and a total transaction value of approximately $4.7 billion, including the assumption of Solutia’s debt, she says.

“The acquisition of Solutia is a significant step in our growth strategy and one that I am confident will strengthen Eastman as a top-tier specialty chemical company with strong, stable margins,” says Jim Rogers, chairman and CEO of Eastman, in a company release. “The addition of Solutia will broaden our geographic reach into emerging geographies, particularly Asia Pacific, establish a powerful combined platform with extensive organic growth opportunities, and expand our portfolio of sustainable products, all of which are consistent with our growth strategy.

“This transaction is also expected to deliver immediate value to our stockholders in the form of accretion and strong cash generation, as well as create potential upside through the combination of two leading global chemical companies,” Rogers says in the release.

“This complementary transaction will accelerate the growth of our businesses around the world,” says Jeffry N. Quinn, chairman, president and CEO of Solutia, in the release. “This transaction provides Solutia’s shareholders with immediate value and an attractive premium, as well as the opportunity to benefit from the future prospects of a leading global chemicals producer with the financial strength, a diversified mix of premium products, and the geographic footprint to capitalize on long-term growth opportunities.”

In 1999 Solutia purchased CP Films.

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In the spirit of the Better Building Initiative, 3M committed to reduce energy use by 25 percent in 78 of its plants, encompassing nearly 38 million square-feet of building space. In 2011, 3M has improved energy efficiency in its operations globally by 8.9 percent compared to 2010. The company also managed to save $43 million in energy costs and supported 150 employee-inspired energy projects that saved the company a total of $7.7 million.

“One of the things that we are planning to work on in the next couple of years is to provide more training to people who are leading our energy programs in our facilities,” says Steve Schultz, corporate energy manager for 3M. “We’ve done a lot to try to share information with our customers and suppliers.”

Some of the energy measures that 3M has taken to boost its efficiency include installing adjustable speed drives on motors that drive pumps within the facilities, improving the energy efficiency of air-handling systems, replacing lighting systems and utilizing waste-heat through heat recovery systems.

 “3M has cut its absolute worldwide greenhouse gas emissions by 72 percent from 1990 to 2010,” adds Tim Thornton, director of 3M Renewable Energy Division’s energy conservation business. “We are proud to take part in this challenge and to share our knowledge with others, so we can all move toward achieving this ambitious goal.”

Performance Films Distributing headquarters

There is much in store for 2012 at Performance Films Distributing. With the late 2011 announcement of the renewal of the company’s distributorship agreement with Solutia, 2012 is off to a strong start for the company.

“We are extremely happy that Solutia has renewed the agreement,” says Bo Ryan, vice president of Performance Films Distributing. “We are looking forward to progressing with Solutia and it puts our customers at ease to know there will be stability with the Solutia brand and with us as their distributor.”

Performance Films Distributing will continue to serve as the exclusive supplier of LLumar, Vista and Formula One window films in the Midwest through 2015.

“As the last independent distributor left, I believe Solutia is confident that we have and will continue to deliver value to our customers,” says Ryan.

Hinting at some possible surprises in 2012, Ryan adds that what they have in store for the new year includes a new approach to the window film market.

“Our focus is to provide our market with a new and fresh approach adding value to our customers and continue to serve our customers the best way possible. Our growth strategies for 2012 are all focused on understanding our customers’ needs and developing solutions to meet those needs,” says Ryan.

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Steve Phillips

Commonwealth Laminating and Coating has decided to stay put and expand. The Martinsville window film manufacturer plans to expand its current manufacturing facilities in the Southwest Virginia community rather than taking the facilities overseas.

“[The expansion] involves two major pieces of equipment—a coater/laminator and a second dyeing line. With those we will be able to make some major enhancements to the operation as a whole,” says Steve Phillips, president and CEO of Commonwealth Laminating and Coating. “This expansion does three things for us. It gives us the needed capacity to support our current and projected growth. Just as importantly it also gives us enhanced capabilities to remain competitive into the future. And, last but not least, it gives us some additional capabilities to enter into parallel and related markets. If you look at window film and what goes into support operations there is a real benefit to having all of your manufacturing in one location.”

Window Film magazine attended a press conference inMartinsville where the announcement was made. The $16.5 million expansion is expected to start in 2012 and will continue over the following 18 months. The expansion will create 40 new jobs with an average salary of $50,000.

Also in attendance was Jim Chang,Virginia secretary of commerce and trade, to celebrate the company’s expansion.

“I’m honored to be here today to bring exciting news that will positively impact rural Virginia,” says Chang. “While [Commonwealth Laminating and Coating] maintains operations in eight locations in five countries around the world this facility serves not only as its headquarters, but also as its sole manufacturing facility. The equipment is high-tech and state-of-the-art and this investment will allow the company to further increase its advanced technology capabilities and advance Virginia’s position in the polymer sector as a leading film manufacturer location.”

Commonwealth Laminating and Coating attributes its ability to expand during tough economic times to overseas markets and new products.

“Right now roughly 50 percent of our business is overseas. Although North America and Europe have been hit hard, other markets in China and Asia have continued to grow,” says Phillips.

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