Eastman Announces Split

Eastman Chemical, Kingsport, TN announced it will separate its cyclical polyethylene-plastic business from its more specialized chemical and plastics businesses. The two companies, with sales of $3 and $2 billion, respectively, will be created through a tax-free distribution to shareholders.

The move is an attempt to unlock some of the market value of its less-cyclical specialty chemicals businesses by breaking them away from commodity PET.

“It’s becoming increasingly clear to us that the two companies require different strategies for success,” said Earnest Deavenport, chief executive, Eastman. Details of the split, including how to divide assets and what to name the new companies, have not been announced.

But Eastman proposed by the end of the year making a stand-alone enterprise of polyethylene terephthalate or PET, which is used in plastic packaging such as soda bottles, milk jugs and trash bags. Allan R. Rothwell, who has been president of Eastman’s chemicals group, will be named CEO. J. Brian Ferguson, who has been president of Eastman’s polymers group, will become CEO of the specialties company, which includes Eastman’s specialty plastics and chemicals used mostly in making sealants, coatings and inks. Mr. Deavenport, 62, will continue as CEO of Eastman until the split is complete and then retire. Eastman’s other management and board of directors will be split between the two companies.