Eastman Chemical Company announced it has entered into a definitive agreement to sell its Texas City Operations, located in Texas City, Texas, to INEOS Acetyls, a global manufacturer and supplier of acetic acid and related chemicals owned by the INEOS Group.
Texas City Operations is currently part of Eastman’s Chemical Intermediates segment. Eastman will retain ownership of its plasticizer business at the site, which INEOS will operate for Eastman as part of this agreement. Eastman and INEOS have also entered into a Memorandum of Understanding to explore options for a long-term agreement for supplying vinyl acetate monomer (“VAM”) to Eastman.
The total sale price of $490 million consists of approximately $415 million cash at closing and the remainder in equal installments on the first and second anniversaries of the closing. The final purchase price is subject to working capital and other customary adjustments at closing. Proceeds from the divestiture in the near term are expected to be used for debt repayment. The company expects the sale to be accretive to adjusted earnings per share in 2024.
“We are happy to have reached this agreement with INEOS. They have been a strong partner with us at the Texas City site and have extensive experience and a complementary position in the acetyls space,” said Erwin Dijkman, Division President, Chemical Intermediates. “Our Texas City Operations is an attractive site with an incredible team of people, and we are pleased that INEOS plans to further invest in and grow the site. We look forward to working closely with INEOS as we prepare for a seamless transition later this year, and longer-term as operators of our plasticizer assets at the site.”
David Brooks, Chief Executive Officer INEOS Acetyls, said, “We are delighted to announce this strategic acquisition, which helps drive our global ambitions for our acetyls business. The site is ideally placed to take advantage of competitively priced feedstocks, which will help support our future growth of our business and the sustainable future of the site.”
Eastman will continue to manufacture acetyls at its Tennessee Operations in Kingsport. Dijkman added, “As a global leader in acetyls, we remain committed to maintaining our position and to serving our current markets. We will also continue to pursue attractive opportunities created by our integrated cellulosics stream in Kingsport, such as our recent growth in textiles and expected growth of our Aventa™ Renew compostable materials in food service applications.”
The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, is expected to be completed in the fourth quarter of 2023. The agreement contains customary representations, warranties, and covenants of both parties.
Beginning in the third quarter of 2023 and until sale, the assets of the Texas City acetyl operations will be reported as held for sale.