Eastman Chemical (EMN) has wrapped up its buyout of specialty chemical company – Taminco Corp. – for $2.8 billion in cash and assumed debt. The company announced the deal in Sep 2014.
Taminco is a top producer of Alkylamines – organic compounds used to make products for a host of end-use markets including agriculture, animal nutrition, water treatment and personal and home care.
Taminco’s former Specialty Amines and Crop Protection businesses will now be a part of Eastman Chemical’s Additives & Functional Products division. Moreover, the entity’s former Functional Amines business will operate under Eastman Chemical’s Specialty Fluids & Intermediates unit.
Under the deal terms, shareholders of Taminco will get $26.00 in cash for each share of Taminco common stock. Citigroup (C) acted as financial advisor to Eastman Chemical on the deal while Morgan Stanley (MS) served as financial advisor to Taminco.
The acquisition will fortify Eastman Chemical’s foothold in attractive niche end-markets including food, feed and agriculture where Taminco has a strong presence. The buyout will also offer compelling opportunities to boost growth in additional markets such as personal care, coatings and oil and gas that are gaining from megatrends including a rising population, demand for high-performance products and energy efficiency.
In addition, the Taminco acquisition will add Alkylamines to Eastman Chemical’s portfolio. Eastman Chemical also expects to capitalize on the common business model to create fresh growth opportunities. The acquisition will also offer attractive cost and revenue synergy opportunities.
Eastman Chemical expects the Taminco buy to be accretive to its earnings (barring acquisition-related costs and charges) for 2015 by more than 35 cents per share and for 2016 by over 60 cents per share.
Separately, Eastman Chemical’s board, last week, beefed up its quarterly dividend by 14% to 40 cents per share from 35 cents per share, representing the fifth straight year of dividend hike. The revised dividend is payable on Jan 2, 2015, to shareholders of record as of Dec 15, 2014.
Eastman Chemical is a Zacks Rank #3 (Hold) stock.
A better-ranked stock in the chemical space is Valhi, Inc. (VHI), carrying a Zacks Rank #1 (Strong Buy).
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