Eastman to Acquire Solutia, Solutia Announces Results

Eastman Chemical (NYSE: EMN) entered into a definitive agreement, under which Eastman will acquire Solutia (NYSE: SOA), a global leader in performance materials and specialty chemicals. Under the terms of the agreement, Solutia stockholders will receive $22.00 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Based on yesterday’s closing prices, Solutia shareholders will receive cash and stock valued at $27.65 per Solutia common share, representing a premium of 42 percent and a total transaction value of approximately $4.7 billion, including the assumption of Solutia’s debt.

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Solutia Inc.reported net sales for the fourth quarter 2011 of $526 million, up $37 million or 8 percent from the same period in 2010. Adjusting for the divestiture of certain other rubber chemicals businesses, sales were up $51 million or 10 percent. Reported income from continuing operations attributable to Solutia was $54 million for the fourth quarter 2011, up $11 million from the same period in 2010. The fourth quarter of 2011 was impacted by certain events affecting comparability (detailed below), which resulted in a net after-tax charge of $5 million. Excluding these items, income increased $16 million. Adjusted EBITDA (defined below) in the fourth quarter of 2011 totaled $121 million, up $5 million from the same period in 2010. Adjusted EPS totaled $.49, up $.13 or 36 percent from the same period in 2010 as a result of higher sales volumes, a favorable selling price/raw material cost spread, lower interest expense and a lower tax rate. These improvements were partially offset by higher R&D expenditures and the loss of earnings resulting from the divestiture of certain other rubber chemicals businesses.