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Eastman Chemical (EMN) Snaps Up Sasol's Marlotherm Assets

Zacks Equity Research

Eastman Chemical Company EMN has purchased the Marlotherm heat transfer fluids manufacturing assets in Germany and associated formulations, intellectual property and customer contracts from South Africa-based integrated energy and chemical company, Sasol.  Financial terms of the deal were not divulged.

Per the company, Marlotherm is a proven brand in heat transfer fluids. The new product line will become a part of Eastman Chemical’s Specialty Fluids business in the Additives & Functional Products segment. The acquired product line complements the company’s existing offerings.

The buyout is in sync with Eastman Chemical’s goal of delivering superior value through disciplined capital allocation including acquisitions. It allows the company to boost its heat transfer fluids product offerings to customers globally.

Revenues from Eastman Chemical’s Additives & Functional Products division rose 9% year over year to $3,647 million in 2018 on the back of higher sales volume, increased selling prices and a favorable foreign currency translation. The Specialty Fluids business, which makes heat transfer and aviation fluids products, accounted for 13% of total sales for the Additives & Functional Products segment in 2018.

Eastman Chemical’s shares have lost 23.4% over the past year, underperforming the 10.1% decline of the industry it belongs to.

Eastman Chemical, in its fourth-quarter 2018 earnings call, said that it sees slower economic growth in 2019 and expects some of the challenges it witnessed in the fourth quarter to continue in the first quarter of 2019. The company also noted that it will remain focused on growing new business revenues leveraging its innovation-driven growth model.

The company also expects to gain from lower raw material costs and its cost management actions and will remain committed to return cash to shareholders through continued share repurchases. It expects these initiatives to more than offset the unfavorable impact of a strengthening U.S. dollar and expected higher pension costs. The company expects adjusted earnings per share growth of 6-10% in 2019.

Eastman Chemical Company Price and Consensus

Eastman Chemical Company Price and Consensus | Eastman Chemical Company Quote

Zacks Rank & Stocks to Consider

Eastman Chemical currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks worth considering in the basic materials space include Ingevity Corporation NGVT, W. R. Grace & Co. GRA and Israel Chemicals Ltd. ICL.

Ingevity has an expected earnings growth rate of 17.9% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied roughly 50% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here .

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have shot up around 29% in the past year.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have gained around 23% over the past year.

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