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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 801  
Subject: Eastman Chemicals buys Solutia Date: 1/27/2012 11:57 AM
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http://www.stltoday.com/news/national/eastman-chemical-buyin...

I suppose this is fitting. Eastman Chemicals is the chemicals manufacturing division spun off from Eastman Kodak some years ago; Solutia is the commodities chemicals division of Monsanto spun off as Monsanto transitioned to a drug company--now mostly part of Pfizer (after Nutrasweet and Celebrex), with the present day Monsanto the ag division of the old Monsanto.

Solutia was probably an acquisition target from the beginning, but they had major environmental problems at Anniston, AL that needed to be resolved first. That problem took them through bankruptcy to resolve, but they emerged about two years ago.

Heavy reliance on films like safety glass inner layer and the architectural films used in window tinting and for decoration seemed to result after various other chemical operations were spun off (ie phosphates JV). The stock did well for a while, but then tanked as the recovery faltered last year.

I sold mine as for tax losses last month. Darn!! The recent recovery before this news makes you think others were doing likewise.
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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 746 of 801
Subject: Re: Eastman Chemicals buys Solutia Date: 1/27/2012 2:15 PM
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http://www.stltoday.com/news/national/eastman-chemical-buyin......

I suppose this is fitting. Eastman Chemicals is the chemicals manufacturing division spun off from Eastman Kodak some years ago; Solutia is the commodities chemicals division of Monsanto spun off as Monsanto transitioned to a drug company--now mostly part of Pfizer (after Nutrasweet and Celebrex), with the present day Monsanto the ag division of the old Monsanto.

Solutia was probably an acquisition target from the beginning, but they had major environmental problems at Anniston, AL that needed to be resolved first. That problem took them through bankruptcy to resolve, but they emerged about two years ago.

Heavy reliance on films like safety glass inner layer and the architectural films used in window tinting and for decoration seemed to result after various other chemical operations were spun off (ie phosphates JV). The stock did well for a while, but then tanked as the recovery faltered last year.

I sold mine as for tax losses last month. Darn!! The recent recovery before this news makes you think others were doing likewise.
- pauleckler | Date: 1/27/2012 11:57:08 AM | Number: 745

Hoffman LaRoche makes a bid for Kodak's chemical business. Hoffman La Roche several years ago bought my Venture Capital investment position in Genentech(DNA). I voted my shares against the buy-out because the buy-out price was 25% to 40% too low.

Kahuna, CFA
Venture Capital
Portfolio Manager

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 747 of 801
Subject: Re: Eastman Chemicals buys Solutia Date: 1/27/2012 7:07 PM
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http://www.nytimes.com/keyword/hoffmann-la-roche

Thanks Kahuna. Apparently a Hoffman LaRoche division is bidding for the Sterling Drug division of Kodak. And they may get it as one of the assets Kodak could sell to resolve its bk filing.

But to clarify, Eastman Chemicals was founded as part of Kodak in Kingsport, TN, but were spun off at least twenty years ago. They made especially cellulosic chemicals like cellulose nitrate and cellulose acetate for film stock. Later they got into all sorts of chemicals related to acetic acid/acetic anhydride/ketene and later polyesters like Kodel. They have become a chemical company. They have the only coal to methanol plant in the US. (Most methanol is made from natural gas.)

Kodak probably still has a need for specialty chemicals used in developing and maybe even as additives in their emulsion formulations. Kodak may still make some of those. They once had a lab chemicals business similar to that of Aldrich or Thermo-Fisher, but I doubt they still have those. That industry has done lots of consolidating. Even the Sterling Drug business is a surprise.

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Author: Howie52 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 748 of 801
Subject: Re: Eastman Chemicals buys Solutia Date: 1/29/2012 3:26 PM
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"Eastman Chemicals was founded as part of Kodak in Kingsport, TN, but were spun off at least twenty years ago. They made especially cellulosic chemicals like cellulose nitrate and cellulose acetate for film stock. Later they got into all sorts of chemicals related to acetic acid/acetic anhydride/ketene and later polyesters like Kodel. They have become a chemical company. They have the only coal to methanol plant in the US. (Most methanol is made from natural gas.)"

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Also they produce one of the polymers used to replace polycarbonate -
one of the "BPA free" materials.

Howie52

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Author: Howie52 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 749 of 801
Subject: Re: Eastman Chemicals buys Solutia Date: 1/29/2012 5:58 PM
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A link to the Eastman Chemical markets page:

http://www.eastman.com/Markets/Pages/Home.aspx

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 750 of 801
Subject: Re: Eastman Chemicals buys Solutia Date: 1/30/2012 1:56 AM
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Eastman is a large vertically integrated producer. Their basic raw material has traditionally been cellulose, initially for cellulose nitrate film stock. That business is still in Kingsport, but the munitions part of it is now done by a spinoff called Holston Engineering (last I heard, but I might be out of date.)

Safety film brought a need for acetic anhydride for cellulose acetate. They were into polyester fibers and films for a while in the days of audio and video tape but I think they got out of that part, which became a drag on earnings.

Last time I was in Kingsport the odor of butyric acid was pervasive. That is oxo process chemistry from propylene. I think they use butyric to modify some of their cellulosics. They also make propionaldehyde and probably propionic acid (mostly sold as a bread mold inhibitor). They get isobutyraldehyde as a coproduct and from that they make diols used in polyester resins for paints and inks. And they now offer other diols made especially for that industry.

Most of what they list are uses of cellulose derivatives. Cellulose triacetate fibers and films, cigarette filter tow.

Solutia brings them specialty films and coated films as well as aspects like rubber chemicals.

These are not high high technology products. Most are ancient. Some over 50 years old. But they make them efficiently making it hard for others to outdo them.

In chemicals we are forever debating what is the difference between a true specialty (customized to a single use or even customer) vs a high value commodity that supports higher margins. Most chemical companies try to avoid the low margin commodities, or make only enough to use/buy raw materials efficiently, but the money is made on higher margin products however defined. Eastman Chemicals in classical portfolio management sells or spins off its low margin businesses and uses the cash generated to buy other companies when the price is right, so they can again sort through their businesses and keep the ones with the best margin and growth potential.

Some do this better than others, but those that do it well live to continue fighting. Those that don't go the way of Eastman Kodak.

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