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Business

Eastman Selling Polymer Plants

Competitors want company's non-U.S. PET business

by Alexander H. Tullo
September 24, 2007 | APPEARED IN VOLUME 85, ISSUE 39

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Credit: Eastman
Eastman's plant in Zárate, Argentina, will go to Mexico's Grupo Alfa.
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Credit: Eastman
Eastman's plant in Zárate, Argentina, will go to Mexico's Grupo Alfa.

TWO PROPOSED transactions could significantly reduce Eastman Chemical's presence in the polyethylene terephthalate (PET) business.

In one deal, Eastman is selling its PET plants in Latin America to the Mexican conglomerate Grupo Alfa for an undisclosed sum. Separately, a Spanish firm, La Seda de Barcelona, has made an offer for Eastman's two remaining European PET plants.

Included in the Alfa transaction is a 150,000-metric-ton-per-year PET plant in Cosoleacaque, Veracruz, Mexico, and a 185,000-metric-ton unit in Zárate, Argentina. The deal marks Alfa's second acquisition of a U.S.-owned PET business. In 2001, Alfa purchased DuPont's business in PET and purified terephthalic acid, a raw material for making PET.

La Seda, which bought Eastman's PET plant in San Roque, Spain, earlier this year, disclosed in a Spanish regulatory filing last week that it is offering Eastman $250 million for its PET plants in Workington, England, and Rotterdam, the Netherlands.

Eastman is not commenting on the offer. If the company does sell the two European units, its only remaining PET plants will be in Kingsport, Tenn., and Columbia, S.C. Taken together, the announcements are raising questions about Eastman's intentions regarding the PET business. "It's pretty clear that they are exiting the business," says one industry observer.

To Eastman, the Latin American sale is about streamlining a business, not exiting it. "Eastman is taking a number of actions to improve the financial performance of its overall PET polymers business," says Gregory O. Nelson, head of its polymers business group.

The company has said it is focusing on plants based on its IntegRex technology, which eliminates a production step, known as solid stating, that increases PET's viscosity to facilitate molding into containers. In late 2006, the company opened a 350,000-metric-ton IntegRex plant in Columbia.

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