At a press conference in Kingsport today, James P. Rogers, Chairman and CEO, Eastman Chemical announced,  “It’s a good day for Eastman, we are agreeing to buy Solutia, a global leader in performance materials and specialty chemicals. For those of you who don’t know Solutia, they are a company that was spun out of Monsanto a number of years ago, similar to the way we came out of Kodak. Fantastic company with a little over $2 billion in revenue, but more importantly it has about $500,000 million in cash flow. It’s a business that we’ve known for some time with highly professional group of people, leaders in their markets, nice geographic diversity, nice market diversity, a play on sustainability, a play on saving energy. You might say, “Are you talking about Eastman or Solutia?” Well, I’m talking about both and that is why we like this so much.”

According to Rogers, “So far this transaction is being perceived quite positively by all of our stakeholders and for good reason. I have to give credit to 10,000 Eastman men and women, their dedication, professionalism, what they have been able to do for the past few years to get us to this point in our growth journey. We are doing this acquisition from a position of strength; this is not something where we need to fill a gap or where we are trying to solve a problem. We have a very strong platform in which to grow and this is a major step for us. The only reason we are able to do a transaction of this size is because of the success of 10,000 Eastman men and women running these core businesses and getting us to this point.

This is good for Kingsport. When Eastman grows as a global company obviously we are going to have operations around the world, obviously we are going to have money we want to spend in a variety of places, but don’t forget; this is our headquarters. We run a centralized operation and to the extent we get larger and have more assets to run no matter where they are around the world, we need more and more capabilities around Kingsport. So over time you can expect our head count to increase and it will increase in the professional ranks and we like that.

There are no overlapping manufacturing assets. So it’s not the kind of case where we have a plant that makes a product and they have a plant that makes the same product and so companies are looking to get together, so how do they rationalize that. That is not the case; they make a different set of products. We have some of the same markets, some of the same customers and we think there will be overlap in our technology but concerning our manufacturing, we’ll need every reactor we have and every person we have.”

Under the terms of the agreement, Solutia stockholders will receive $22.00 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Based on yesterday’s 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. According to Rogers, “This is by far the largest thing that Eastman Chemical has ever done, that’s a big transaction. The way this acquisition is going to happen is we’ll get a proxy together, the proxy will go out to their shareholders, they will have a meeting to approve the acquisition (we fully expect they will approve it) and then we’ll go through the regulatory process to ensure there are no trust concerns, there are not. Our expectation is that this transaction ought to be able to close in the middle of the year probably in the July timeframe. We are excited across the board, a lot of people worked on this transaction. Obviously, something like this takes several months and I am very proud of the fact that this didn’t leak out. Again, that goes to Eastman’s culture, it goes to our ethical standards and I’m proud of the fact that this is a surprise.”