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Eastman to Acquire Sterling Chemicals
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Acquisition will enable company to expand its non-phthalate plasticizer capacity to meet growing market demand

KINGSPORT, Tenn., June 22, 2011 – Eastman Chemical Company (NYSE:EMN) today announced that it has entered into a definitive merger agreement to acquire Sterling Chemicals, Inc. (OTC BB:SCHI.OB), a single site North American petrochemical producer, for $100 million in cash, subject to modest deductions at closing as provided in the merger agreement. The transaction, which includes Sterling’s plasticizer and acetic acid manufacturing assets in Texas City, Texas, is expected to be accretive to Eastman’s full-year 2012 earnings per share in excess of Eastman’s cost of capital. 

Eastman plans to modify and restart Sterling’s currently idled plasticizer manufacturing facility to produce non-phthalate plasticizers, including Eastman 168™ non-phthalate plasticizers. This additional capacity will enable the company’s Performance Chemicals and Intermediates (PCI) segment to serve the growing market demand for non-phthalate alternatives. In the North American and European non-phthalate plasticizers markets, total sales volume is expected to increase at a compounded annual rate of approximately seven percent over the next five years.

“This acquisition supports our growth strategy for our plasticizer product line, and will enable us to keep pace with the growing demand for non-phthalate alternatives, like our Eastman 168™,” said Ron Lindsay, executive vice president, performance chemicals and intermediates, and fibers. “We look forward to working with Sterling employees as we bring this additional capacity online and continue to grow this business.”

The acquisition also includes Sterling’s acetic acid production facility and its supply to BP Amoco Chemical Company under a long-term production agreement.

The transaction, which has been approved by both boards of directors, is expected to be completed after receipt of required regulatory approvals, approval of Sterling’s stockholders, and satisfaction of other customary closing conditions. It is expected to be funded with available cash. Oppenheimer & Co. Inc. is acting as exclusive financial advisor to Eastman on this transaction and Eastman’s legal counsel is Jones Day.

Forward-Looking Statements: This news release includes forward-looking statements concerning the acquisition of Sterling Chemicals, Inc., including modification and restart of Sterling’s currently idled plasticizer manufacturing facility to produce Eastman 168™ non-phthalate plasticizers, Eastman’s expected competitive position in the market for non-phthalate plasticizer products after the acquisition, expected earnings from the acquired business and product lines, projected market demand and volume increases for non-phthalate plasticizer products, and expected completion and funding of the acquisition. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's filings with the Securities and Exchange Commission, including the Form 10-Q filed for first quarter 2011 and available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Eastman’s chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions. The company is committed to finding sustainable business opportunities within the diverse markets and geographies it serves. A global company headquartered in Kingsport, Tenn., USA, Eastman had 2010 sales of $5.8 billion. For more information, visit www.eastman.com.

Media: Tracy Broadwater
423-224-0498 / tkbroadwater@eastman.com

Investors: Greg Riddle
212-835-1620 / griddle@eastman.com

 
 
 
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