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Eastman Chemical (EMN) to Divest Tire Additives Product Lines

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·3 min read
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  • EMN
  • NUE
  • OLN
  • CBT

Eastman Chemical Company EMN recently agreed to sell the rubber additives as well as other product lines as well as related assets and technology of the global tire additives business in the Additives & Functional Products segment to an affiliate of One Rock Capital Partners, LLC. The agreement, however, does not include the sale of Eastman Impera and other performance resins product lines of the tire additives business. The company anticipates the sale to be either neutral or incremental to adjusted earnings per share in 2022.

The deal is worth $800 million and includes $725 million cash at closing and an additional amount of up to $75 million that will be paid based on performance of the rubber additives business post-closing through 2023.

This final price is subject to working capital and other adjustments at closing.

The sale is expected to be completed in the second half of this year, subject to regulatory approvals. From the ongoing quarter until the sale, the assets of the rubber additives business will be reported as held for sale. The company expects to recognize asset impairments or a loss from the agreement and completion of the sale.

Eastman Chemical’s shares have surged 80.1% in the past year, compared with 55.8% rise of the industry.

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Eastman Chemical, in its last earnings call, stated that it is seeing continued momentum in the second quarter as it gains from innovation, strong market recovery and lower operating costs from its operations transformation program.

The company expects adjusted earnings per share between $8.25 and $8.75 for 2021. It also anticipates free cash flow to reach $1.1 billion in the year.

Eastman Chemical Company Price and Consensus

Eastman Chemical Company Price and Consensus
Eastman Chemical Company Price and Consensus

Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote

Zacks Rank & Other Key Picks

Eastman Chemical currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Nucor Corporation NUE, Olin Corporation OLN and Cabot Corporation CBT.

Nucor has a projected earnings growth rate of around 260% for the current year. The company’s shares have surged 154.3% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin has an expected earnings growth rate of around 506.7% for the current year. The company’s shares have skyrocketed 277.9% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have surged 69.9% in the past year. It currently carries a Zacks Rank #1.

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