News

Eastman to Pay $2.8 Billion for Alkylamines Producer Taminco

15.09.2014 -

Major US chemical producer Eastman has agreed to acquire compatriot Taminco, a major producer of alklylamines and alkylamine derivatives, for $2.8 billion. The deal proposed to be completed in the fourth quarter includes $1 billion of assumed debt.

The news agency Bloomberg said Eastman is paying 10.9 times Taminco's annual earnings before interest, taxes, depreciation and amortization, compared with an average 7.3 times EBITDA paid for chemical companies generally this year.

It would be Eastman's second biggest acquisition after its 2012 purchase of Solutia for $4.5 billion.

In a webcast to announce the acquisition, Eastman CEO Mark Costa said Taminco, headquartered at Allentown, Pennsylvania, is a strong fit with his company's strategic focus, "adding an attractive alkylamines stream to our chemical portfolio." He quantified the deal multiple as 9.5 times estimated adjusted 2014 EBITDA and eight times after expected cost savings.

The agreement includes a 30-day "go-shop" period, during which Taminco and financial adviser Morgan Stanley will solicit superior proposals. The company is permitted to enter negotiations with a bidder whose proposal is deemed superior during that period and during a 15-day period thereafter.

Eastman said the deal will strengthen its business in the food, animal nutrition, and agriculture markets, where Taminco's alklyamines technology is widely used, as well as improving the Kingsport, Tennesse-based producer's position in personal care, coatings, and oil & gas.

The transaction is expected to be accretive to earnings by 2015 and is also expected to generate around $60 million in cost savings, mostly from cost-cutting in corporate functions and operations, Eastman said.

Private equity investor Apollo acquired Taminco from another private equity firm, CVC Capital Partners, in early 2012. It floated some shares shortly afterward, before selling another tranche in 2013. The firm retains a majority stake, believed to be close to 54%. It was the only shareholder needed to vote in favor of the deal.

Taminco has production facilities in 19 countries, with an installed capacity of 1.27 million tonnes of a variety of products. According to its annual report, about 90% of sales in 2013 were derived from the agriculture, water treatment, home and personal care, animal nutrition, and oil and gas end markets. At the beginning of 2014, the company acquired Kemira's formic acid business for $191.5 million.

The Pennsylvania chemical producer believes it has number-one or number-two positions in "the vast majority" of the chemicals it makes. It reported revenues of $1.2 billion and adjusted EBITDA of $255 million for 2013, along with a net loss of $7 million.