29 July 2011 20:12 [Source: ICIS news]
HOUSTON (ICIS)--Eastman Chemical will continue a long-term acetic acid production agreement after it buys Texas-based Sterling Chemicals in the third quarter this year, a top company executive said on Friday.
Eastman CEO Jim Rogers said in an earnings conference call that his company would continue Sterling’s agreement with BP that runs through December 2031 after the $100m (€70m) purchase is completed in the third quarter.
Both companies produce acetic acid, but Rogers said US Eastman would not mix its technology with Sterling’s after the deal is done.
“The technology that runs there is owned by BP,” Rogers said. “We will simply be tolling that asset for them. That’s part of the reason that BP is comfortable with us running those assets, because they trust us, they know that we’ll respect that wall.”
Sterling and BP Amoco Chemical renewed their agreement in 2008 giving BP the right to buy all of the acetic acid produced at Sterling's Texas City plant through December 2031. Acetic acid is a major raw material for vinyl acetate monomer (VAM).
When the deal was announced, Eastman said its main attraction to Sterling was the company’s plasticizer facility at its Texas City plant.
Rogers said that Sterling’s acetic acid business generated annual revenues of $100m, which is the price Eastman is paying for the company.
($1 = €0.70)
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