NEW YORK — Eastman Chemical Co. is selling the bulk of its tire additives business to a private equity firm for up to $800 million.
Eastman said it is divesting the Crystex insoluble sulfur and Santoflex antidegradants tire additives businesses as part of what the company describes as an ongoing effort to improve its Additives & Functional Products segment.
One Rock Capital Partners L.L.C.'s deal to acquire the segment comprises an initial payment of $725 million to Kingsport, Tenn.-based Eastman, followed by up to another $75 million through 2023 based on the performance of the acquired operations.
"After reviewing strategic options, we believe this action is the most beneficial to Eastman and the rubber additives business," Eastman CEO Mark Costa said. "We continue to evaluate other actions to improve our AFP segment."
The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, is expected to be completed in the second half of 2021. Beginning in the second quarter of 2021 and until the sale is concluded, the assets of the rubber additives business will be reported as held for sale, Eastman said.
The tire additives segment makes insoluble sulfur, antidegradants and post-vulcanization stabilizers for the tire market.
Included in the deal are seven plants, two technology centers and more than 500 employees, Eastman said.
Tire additives accounted for 14% of Eastman's fiscal 2020 sales of $8.47 billion, according to the firm's annual report.
The deal does not include the Eastman Impera and other performance resins product lines of the tire additives business, the parties 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."
Besides the Crystex brand of insoluble sulfur, the Santoflex brand of antidegradants, the deal includes the Duralink HTS post-vulcanization stabilizer.