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Chemical Finance Digest, June 5
12:40 PM MDT | June 5, 2012 | By VINCENT VALK
Topping the headlines, the European Commission has cleared Eastman’s $4.7 billion acquisition of Solutia, as Solutia has scheduled a shareholders’ meeting on June 29 to vote on the deal. If shareholders approve, the deal is expected to close during the first week of July.
In other M&A news, PTT Global Chemical has completed its acquisition of a 50% stake in NatureWorks, a biopolymers firm, while Neo Materials Technologies shareholders have accepted an offer from Molycorp.
Tata Chemicals and SQM both reported increases in earnings, as sales volumes rose for both companies. Meanwhile, Monsanto has raised its full-year earnings guidance by 4.5% on strong seed sales.
Eastman is planning to issue $2.3 billion in five, ten and thirty-year debt to fund the Solutia acquisition. The debt has been rated ‘Baa2’ by Moody’s and ‘BBB’ by S&P. The company is also using a $1.2 billion five-year term loan to fund the deal. S&P praised the acquisition, saying “we believe it should enhance Eastman's competitive position by adding some complementary technologies and accelerating access to high-growth markets, particularly in Asia," according to credit analyst Cynthia Werneth. “We also believe that it would improve manufacturing site, product, geographic, and end-market diversity,” S&P adds.
Last week’s macroeconomic news was fairly disappointing, at least in the U.S. Employment growth for May rose 69,000, below estimates, as the Labor Department revised March and April’s job growth figures downwards. Meanwhile, light vehicles sold at an annualized 13.7-million unit rate in May, below expectations. However, sales were “in line with the IHS Global Insight outlook that the sales pace will slow from the fast start realized in the first quarter,” according to IHS economists Chris Hopson and Tracy Handler.