Eastman Chemical Co. said Thursday it has entered into a definitive agreement with Solvay to sell its interest in the Primester cellulose acetate flake joint venture in Kingsport, Tenn.
Eastman and Solvay are currently equal partners in the joint venture. The transaction allows Eastman to eliminate costs associated with the excess cellulose acetate flake capacity of the joint venture.
“Last fall, Eastman completed a small capital investment to increase flake capacity at our Tennessee Eastman manufacturing site in Kingsport,” said Scott Ballard, vice president and general manager of Eastman’s Fibers segment. “With this expansion and last year’s shutdown of our Workington, U.K. acetate tow site, it is no longer necessary for Eastman to support the fixed costs of Primester to have sufficient cellulose acetate flake capacity to reliably supply all of our tow capacity around the world, including the entirety of our [South] Korea and China joint ventures.”
Eastman will continue to supply certain services, utilities and raw materials to Primester for Solvay’s operation of the former joint venture assets. The sale is subject to satisfaction of customary closing conditions and is expected to close in second quarter 2016. Terms of the sale were not disclosed.
“After our partnership of 25 years, this agreement allows Solvay to continue securing the most economical long-term supply of cellulose acetate flake for its own tow business in Germany, Brazil and Russia, while adapting capacity to demand,” said Philippe Rosier, president of Solvay Global Business Unit Acetow.
Solvay is an international chemical and advanced materials company based in Brussels, with nest sales of about 30,900 employees spread across 53 countries. It generated pro forma net sales of 12.4 billion euros, or about $13.9 billion, in 2015.
Eastman produces more than 300 different types of Estron acetate yarn and Chromspun colored acetate yarn. All its acetate yarns are made from renewable cellulose acetate derived from wood pulp. Major markets for Estron and Chromspun include suit linings, eveningwear, bridal gowns, knit apparel and velvet.
Eastman is a global specialty chemical company that produces a broad range of products, including textile fibers, transportation, building and construction, and consumables. Eastman serves customers in some 100 countries and had 2015 revenues of about $9.6 billion.
In the first quarter ended March 31, Eastman said reported operating earnings increased 28 percent to $399 million on sales that declined 8.3 percent to $2.2 billion versus $2.4 billion. In the fibers division, sales in the quarter fell 1.4 percent to $280 million. The company is headquartered in Kingsport and employs 15,000 people around the world.