Eastman (EMN) to Divest Texas City Operations to INEOS Acetyls
Eastman Chemical Company EMN recently announced a definitive agreement to sell its Texas City Operations in Texas City, TX, to INEOS Acetyls, a globally recognized manufacturer and supplier of acetic acid and related chemicals under the INEOS Group. This Texas City Operations unit currently falls under Eastman's Chemical Intermediates segment.
As part of this deal, Eastman will maintain ownership of its plasticizer business at the site, which INEOS will operate on Eastman's behalf. Eastman and INEOS have also signed a Memorandum of Understanding to explore potential options for a long-term agreement concerning the supply of vinyl acetate monomer (VAM) to Eastman.
The transaction's total sale price is $490 million, with around $415 million to be paid in cash at closing, and the remaining sum will be distributed in equal installments on the first and second anniversaries following the closing date. The final purchase price will be subject to customary adjustments, including working capital, at the time of closing. Eastman anticipates using the proceeds from this divestiture for debt repayment. The company also expects the sale to positively impact adjusted earnings per share in 2024.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote
Eastman is dedicated to the ongoing production of acetyls at its Kingsport, TN Operations, reaffirming its commitment to maintaining a leading position within the acetyls industry while diligently serving its established markets. Furthermore, Eastman is actively exploring the potential opportunities stemming from its integrated cellulosic capabilities in Kingsport, exemplified by the recent surge in textile-related initiatives and the anticipated expansion of Aventa Renew compostable materials for applications in the food service sector.
The sale is contingent on regulatory approvals and the satisfaction of customary closing conditions, and it is projected to conclude in the fourth quarter of 2023. The agreement includes typical representations, warranties, and covenants from both parties. Starting in the third quarter of 2023 and continuing until the completion of the sale, the assets of the Texas City acetyl operations will be reported as held for sale.
Shares of Eastman have gained 1.4% in the past year against a 6% rise of the industry.
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Zacks Rank & Key Picks
Eastman currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are WestRock Company WRK and Hawkins, Inc. HWKN, both sporting a Zacks Rank #1 (Strong Buy), and Alamos Gold Inc. AGI, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings estimate for Westrock’s current year is pegged at $3.02. In the past 60 days, WRK’s current-year earnings estimate has been revised upward by 29%. WRK beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 30.7%. The company’s shares have rallied 11.6% in the past year.
The consensus estimate for Hawkins’ current-year earnings is pegged at $3.40, indicating year-over-year growth of 18.9%. In the past 60 days, HWKN’s current-year earnings estimate has been revised upward by 32.3%. HWKN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 53.8% in the past year.
The earnings estimate for Alamos’ current year is pegged at 43 cents, indicating a year-over-year growth of 53.6%. The Zacks Consensus Estimate for AGI current-year earnings has been revised 7.5% upward in the past 60 days. The company’s shares have risen roughly 40.5% in the past year.
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