UpdateEastman to sell PET business to DAK Americas for $600m

25 October 2010 16:06  [Source: ICIS news]

Eastman agrees to sell PET business(adds paragraphs 1-5)

HOUSTON (ICIS)--US major Eastman Chemical has agreed to sell its polyethylene terephthalate (PET) business to DAK Americas for $600m (€426m), the companies said on Monday.

The acquisition includes three integrated petrochemical plants in South Carolina with capacity totalling 1.28m tonnes/year, said Mexican conglomerate ALFA, the parent company of DAK Americas.

Two of the plants produce PET, while the other makes purified terephthalic acid (PTA), a raw material for polyester. Through the first six months of 2010, ALFA said the plants had generated sales of $405m.

“This strategic acquisition reinforces our presence in the North American PTA and PET markets, where we supply some of the most important companies in consumer segments such as beverage, food and personal care, which have traditionally been resilient to economic cycles,” said Armando Garza Sada, board chairman for ALFA.

Prior to the acquisition, DAK already operated three US PET plants in South Carolina and North Carolina with a combined capacity of 510,000 tonnes/year, according to ICIS plants and projects. The company also has a 550,000 tonnes/year PTA plant in Cape Fear, North Carolina.

The deal with Eastman was forecast to close during the fourth quarter of 2010. The final purchase price was subject to working capital adjustments at the time the deal closes, but Eastman said it expected to see a “modest gain” from the sale.

The acquisition also included the related assets and technology of Eastman's performance polymers segment.

“After reviewing strategic options for our performance polymers PET business, we determined this action to be the most beneficial to Eastman and our stockholders,” said Jim Rogers, Eastman president and CEO.

“With the path forward for PET now clear, we are dedicating all of our energies to leveraging our solid core businesses and strong balance sheet to deliver value creating growth,” he added.

Eastman said the sale, which was still subject to regulatory approvals, was not expected to affect product lines in the group’s specialty plastics segment.

In conjunction with the acquisition, the group added that it had approved a restructuring plan to reduce costs and expected restructuring charges in the fourth quarter.

In March, Eastman filed a lawsuit against Dak, alleging Dak had used Eastman’s patented IntegRex technology for the production of PET without authorisation.

Additional reporting by Franco Capaldo

($1 = €0.71)

For more on Eastman visit ICIS company intelligence
For more on PET and PTA visit ICIS chemical intelligence
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By: Ben DuBose
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