NEW YORK—Eastman Chemical Co. is selling the company's tire additives business to a private equity firm for up to $800 million.
One Rock Capital Partners L.L.C. of New York has a new deal to acquire the segment from Kingsport, Tenn.-based Eastman for an initial payment of $725 million.
One Rock also could pay Eastman up to another $75 million through 2023 based on performance of the acquired operations.
The Eastman sale to One Rock includes the Crystex brand of insoluble sulfur, the Santoflex brand of antidegradants, and the Duralink HTS post-vulcanization stabilizer. The Impera brand of performance resins remains with Eastman and is not included.
Eastman is divesting the tire additives business as part of what the company describes as an ongoing effort to improve its Additives & Functional Products segment.
"After reviewing strategic options, we believe this action is the most beneficial to Eastman and the rubber additives business," Eastman CEO Mark Costa said in a statement. "We continue to evaluate other actions to improve our AFP segment."
Eastman declined further comment pending completion of the sale. But the firm previously made it clear it was shopping the tire additives business.
Chief Financial Officer Willie McLain, on the company's April 30 quarter earnings conference call, told stock analysts Eastman was making progress on restructuring to improve the business, but still looking to sell. The improvements, he said at the time, included rebounds in both market conditions as well as new customers due to innovation.
The segments, the CFO said at the time, represented less than 10 percent of the company's earnings before interest, taxes, depreciation and amortization.
Keeping the Impera brand of performance resins, McLain said at a recent Deutsche Bank Global Basic Materials Conference presentation, represents about 15 percent of the revenues of the tire additives business.
"The Impera resins business, we chose to keep that in the Eastman portfolio. That's a more natural fit with our adhesives business," McLain said during the Deutsche Bank conference.
Included in the deal are seven plants, two technology centers and more than 500 employees, Eastman said.
Tony Lee, managing partner at One Rock, called the tire additives business a "global leader known for high-performance, mission-critical products and technical leadership."
One Rock, which is headquartered in the famous 30 Rockefeller Plaza building, also was attracted to the tire additives business due to its client list.
"The business serves an impressive group of global blue-chip customers as a result of its unique technical and commercial service expertise. During the next stage of growth, we look forward to working closely with management to enhance the portfolio of product and service offerings," R. Scott Spielvogel, another managing partner at One Rock, said in a statement.
