Tennessee based Eastman Chemical cancels plans for spin-off

KINGSPORT, Tenn. - Eastman Chemical Co. is dropping plans to spin off its specialty chemicals and plastics business, the company said Monday. Its shares rose more than 2.5 percent in early trading. <br> <br> Eastman proposed the spin-off a year ago, hoping to benefit both its main chemicals business and its cyclical specialty chemicals and plastics operations. <br> <br> The split was supposed to occur at year&#39;s end, but the company decided in November to delay the move because of adverse market conditions. <br> <br> &#34;Our commitment to maximize value for our share owners has not changed, especially in these challenging times for our industry and economy,&#34; J. Brian Ferguson, Eastman&#39;s new chairman and chief execueive, said Monday. <br> <br> In morning trading on the New York Stock Exchange, Eastman Chemical shares were up 2.6 percent, or $1.02 a share, at $40.02. <br> <br> Although Eastman Chemical will not be splitting into separate companies, preparations for the spin-off led to the conclusion that the company should operate in two divisions. <br> <br> The new Voridian division has taken the company&#39;s polymers, fibers and PET plastics segments. Coatings, adhesives, inks and performance chemicals remained with Eastman Chemical. Both divisions answer to Ferguson. <br> <br> &#34;The intent of the spin-off was to separate our businesses so that each could set its own course for growth, resource allocation and strategies,&#34; Ferguson said. <br> <br> &#34;The work we did internally to separate the businesses last year has allowed us to set up a divisional structure that does just that, without splitting into two publicly traded companies.&#34; <br> <br> Voridian will focus on being &#34;a low-cost producer of market-leading products,&#34; while the rest of Eastman Chemical will concentrate &#34;on developing new products and services,&#34; Ferguson said. <br> <br> Earlier this month, Eastman Chemical reported a $179 million loss on $5.4 billion in sales for 2001, citing a weak economy and falling demand for its products. An internal memo from the company indicates it is currently looking for savings ranging from cutting overtime to reducing maintenance costs. <br> <br> With headquarters in Kingsport, Eastman Chemical makes and markets chemicals, fibers and plastics worldwide with some 15,800 employees in more than 30 countries. <br>

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