Eastman Chemical Selling Primester JV Interest To Solvay

Eastman Chemical (NYSE:EMN) has agreed to divest its interest in the Primester cellulose acetate flake joint venture in Kingsport, TN to its partner Solvay (BR:SOLB). Both companies are currently equal partners in the joint venture. The terms of the deal were not divulged.

Eastman Chemical will continue to provide some services, utilities and raw materials to Primester for Solvay’s operation of the former joint venture assets. The divestment, which is subject to satisfaction of customary closing conditions, is expected to complete in second-quarter 2016.

The sale of interest in Primester will enable Eastman Chemical to eliminate costs related to the excess cellulose acetate flake capacity of the joint venture.

The chemical maker said that it made a small capital investment last fall to beef up flake capacity at its Tennessee Eastman manufacturing facility in Kingsport. With this expansion and the shutdown of its Workington, UK acetate tow facility in 2015, it is no longer necessary for the company to support the fixed costs of Primester to have sufficient cellulose acetate flake capacity to supply all of its acetate tow capacity globally.

Eastman Chemical’s shares fell around 0.6% to close at $73.02 last Thursday.

Eastman Chemical’s profit surged in first-quarter 2016, helped by its cost-saving actions and continued momentum in its specialty businesses. Adjusted earnings topped the Zacks Consensus Estimate but sales missed expectations. Revenues fell in the quarter, hurt by lower pricing and unfavorable currency impact.

Eastman Chemical’s diversified chemical portfolio, along with its integrated and diverse downstream businesses, remain its strength. It also benefits from acquisitions, business restructuring, cost-cutting measures and increased capacity additions. However, Eastman Chemical is still faced with pricing and competitive pressures. The company is also exposed to currency headwinds.

Eastman Chemical currently sports a Zacks Rank #3 (Hold).

Better-ranked companies in the chemical space include Albemarle Corporation (NYSE:ALB) , Innophos Holdings Inc (NASDAQ:IPHS) and Innospec Inc. (NASDAQ:IOSP) with all holding a Zacks Rank #1 (Strong Buy).


EASTMAN CHEM CO (EMN): Free Stock Analysis Report

ALBEMARLE CORP (ALB): Free Stock Analysis Report

INNOPHOS HLDGS (IPHS): Free Stock Analysis Report

INNOSPEC INC (IOSP): Free Stock Analysis Report

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