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Acquisition helps Eastman meet demand for non-phthalate plasticizers

Plastics and chemicals supplier Eastman Chemical Company has signed a definitive merger agreement to acquire Sterling Chemicals Inc. for $100 million in cash. Among other plans, Eastman says it will modify and restart Sterling's idled plasticizer manufacturing facility to produce non-phthalate plasticizers. Phthalate plasticizers, used to soften PVC, have been under regulatory scrutiny after some research has shown certain ones may be hormone disruptors.

Sterling includes a single production site in Texas City, TX. For more than 30 years  Eastman has had a non-phthalate plasticizer, Eastman 168, in its portfolio, and the company says it will use the Sterling site to increase its capacity of these. According to Eastman, total sales volume for non-phthalate plasticizers in North America and Europe is expected to increase at a compounded annual rate of about 7% over the next five years.

Last year Eastman 168 non-phthalate plasticizer earned listing in EU Commission regulation (EC) No 975/2009 amending Annex III (the list of additives which may be used in the manufacture of plastic materials and articles) of Directive 2002/72/EC relating to plastic materials and articles intended to come into contact with foodstuffs. The additive already had Food Contact Notification (FCN) clearance from the U.S. Food and Drug Administration.

Eastman says the plasticizer has been demonstrated to be a ready, drop-in replacement for some of the most widely used ortho-phthalate products (a.k.a. phthalates). Earlier this year Eastman increased the capacity at its Kingsport HQ for the plasticizer by about 10%, and other suppliers of these non-phthalate plasticizers also have been gearing up for the expected demand.

"This acquisition supports our growth strategy for our plasticizer product line, and will enable us to keep pace with the growing demand for non-phthalate alternatives, like our Eastman 168," said Ron Lindsay, Eastman's executive vice president, performance chemicals and intermediates, and fibers, in a company statement. "We look forward to working with Sterling employees as we bring this additional capacity online and continue to grow this business."

The acquisition also includes Sterling's acetic acid production facility and its supply to BP Amoco Chemical Company under a long-term production agreement. The transaction has been approved by both companies' board of directors but still requires regulatory approvals and the approval of Sterling's stockholders.

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