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Eastman Chemical (EMN) Closes Commonwealth Takeover

Zacks Equity Research

Eastman Chemical (EMN) has wrapped up its acquisition of Commonwealth Laminating & Coating, Inc. The company announced the deal in March 2014. Financial terms of the transaction were not divulged.

Commonwealth, which had sales of around $100 million last year, makes and markets window films and specialty films for automotive, architectural, and protective applications. The acquisition includes the entity’s manufacturing facility and master distribution center in Martinsville, VA, as well as nine sales distribution centers that cater the global market.

The acquired business, which is now part of Eastman Chemical’s Advanced Materials business division, is expected to add to the company’s earnings (barring excluding acquisition-related costs and charges) for 2015.

The Commonwealth acquisition will broaden Eastman Chemical’s global performance films offerings for solar control window film and protective film applications and will allow the company to better serve its vast customer base. Eastman Chemical sees sustained growth of its performance films products driven by the addition of Commonwealth’s expertise, paint protection technology, brand and sales channels and experienced employees.

Eastman Chemical is aggressively pursuing acquisitions to incite growth. The acquisition of Solutia in 2012 represents a major step in the company’s strategy to boost its foothold in the emerging markets, especially in Asia Pacific.

Moreover, the buyout of BP Plc’s (BP) aviation turbine engine oil business (completed in Jun 2014) will enable Eastman Chemical to better address the needs of the global aviation industry.

Eastman Chemical also recently completed its purchase of specialty chemical company – Taminco Corp. – for $2.8 billion in cash and assumed debt. The acquisition will fortify its foothold in attractive niche end-markets including food, feed and agriculture where Taminco has a strong presence.

Eastman Chemical’s diversified chemical portfolio, along with its integrated and diverse downstream businesses remains its strength. It also benefits from business restructuring and cost-cutting measures. However, the company is still exposed to raw material cost and competitive pressures.

Eastman Chemical is a Zacks Rank #3 (Hold) stock.

Better-ranked chemical stocks include Innospec Inc. (IOSP) and Valhi, Inc. (VHI) with both holding a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on BP
Read the Full Research Report on EMN
Read the Full Research Report on VHI
Read the Full Research Report on IOSP


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