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EASTMAN SHIFTS ON FINE CHEMICALS
Firm won't sell business after all, but will exit pharmaceuticals
Eastman Chemical has canceled plans to sell most of its fine chemicals business. The company will instead streamline operations and keep trying to sell manufacturing plants in Wales and Hong Kong that are devoted to pharmaceutical ingredients production.
"We have been unable to come to terms with interested buyers for our entire fine chemicals business," Chairman and CEO Earnest W. Deavenport Jr. says. "We will now focus on restructuring this business in line with our other specialty chemical businesses."
||OFF THE BLOCK Eastman is keeping its Batesville, Ark., plant.
Eastman won't detail the restructuring plan, but industry sources say the company is essentially abandoning its pursuit of contract pharmaceutical manufacturing. Eastman embarked on that effort in 1995 with the purchase of the two overseas plants.
The fine chemicals business will keep a plant in Batesville, Ark., and operations at Eastman's headquarters in Kingsport, Tenn. These units mostly supply nonpharmaceutical customers.
Nine Eastman executives, including Robert K. Hornsey, vice president and general manager of fine chemicals, were fired last week. Eastman says further cuts in the unit may follow, but it will try to redeploy people within the company. Costs relating to the restructuring could lead to a charge to earnings later this year.
Competitors in the fine chemicals industry say Eastman made the mistake of pouring money into assets without establishing a firm customer base. Top management was never fully committed to the business, one maintains.
Reportedly, three buyers were interested in the business. Dissuading them, however, was the lack of an established contract business and that other U.S. fine chemicals assets--notably Chem Design and Hickson Dan Chem--are up for sale.
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