Eastman to Acquire Solutia

KINGSPORT, Tenn. & ST. LOUIS--(BUSINESS WIRE)--Eastman Chemical Company (NYSE: EMN) and Solutia Inc. (NYSE: SOA) today announced that they have entered into a definitive agreement, under which Eastman will acquire Solutia, a global leader in performance materials and specialty chemicals. Under the terms of the agreement, Solutia stockholders will receive $22.00 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Based on yesterday’s closing prices, Solutia shareholders will receive cash and stock valued at $27.65 per Solutia common share, representing a premium of 42 percent and a total transaction value of approximately $4.7 billion, including the assumption of Solutia’s debt.

“The acquisition of Solutia is a significant step in our growth strategy and one that I am confident will strengthen Eastman as a top-tier specialty chemical company with strong, stable margins,” said Jim Rogers, chairman and chief executive officer of Eastman. “The addition of Solutia will broaden our geographic reach into emerging geographies, particularly Asia Pacific, establish a powerful combined platform with extensive organic growth opportunities, and expand our portfolio of sustainable products, all of which are consistent with our growth strategy.

“This transaction is also expected to deliver immediate value to our stockholders in the form of accretion and strong cash generation, as well as create potential upside through the combination of two leading global chemical companies,” said Rogers.

“This complimentary transaction will accelerate the growth of our businesses around the world. The shared commitment to innovation, quality and technical service will allow us to better serve our customers and creates opportunity for our employees around the globe,” said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia. “This transaction provides Solutia’s shareholders with immediate value and an attractive premium, as well as the opportunity to benefit from the future prospects of a leading global chemicals producer with the financial strength, a diversified mix of premium products, and the geographic footprint to capitalize on long-term growth opportunities.”

“I commend the excellent management team and employees of Solutia. Over the past several years, Solutia has transformed itself into a financially strong, innovative performance materials and specialty chemicals company, with enviable market leading positions in virtually every market it serves,” added Rogers. “That, in addition to both companies’ success integrating prior acquisitions, gives me confidence we will achieve a smooth transition. We look forward to welcoming Solutia employees to Eastman.”

Solutia a strong, strategic fit

Eastman and Solutia share several key fundamentals, such as complementary technologies and business capabilities, a polymer science backbone, similar operating philosophies and a high performance culture. In addition, the overlap of key end-markets is expected to provide opportunities for growth.

This acquisition is also a significant step in Eastman’s strategy to extend its global presence in emerging markets. In particular, it should significantly accelerate Eastman’s growth efforts and offer excellent growth opportunities in Asia Pacific. By leveraging infrastructure in the region, Eastman expects to have a compound annual growth rate in Asia Pacific approaching 10 percent for the next several years.

Transaction expected to deliver strong earnings growth and significant cost and revenue synergies

Eastman expects the transaction to be immediately accretive to earnings, excluding acquisition-related costs and charges. After giving effect to the acquisition of Solutia, including expected cost synergies, Eastman expects 2012 EPS to be approximately $5 excluding acquisition-related costs and charges. Eastman is also increasing its 2013 EPS expectation to greater than $6.

Eastman has identified annual cost synergies of approximately $100 million that are expected to be achieved by year-end 2013. Key areas of value creation include the reduction of corporate costs, raw material synergies, and improved manufacturing and supply chain processes.

Further, Eastman expects to realize significant tax benefits from Solutia’s historical net operating losses and other tax attributes that are expected to contribute to free cash flow (defined as cash from operations minus capital expenditures and dividends) of approximately $1.0 billion through 2013.

Eastman also recognizes the potential for meaningful revenue synergies by leveraging both companies’ technology and business capabilities and end-market overlaps, particularly in automotive and architectural.

Attractive capital structure, benefiting from low interest rate environment

Eastman intends to finance the cash portion of the purchase price through a combination of cash on hand and debt. Debt financing has been committed by Citi and Barclays Capital which are acting as financial advisors to Eastman on the transaction, and Jones Day is acting as legal counsel. Eastman’s management and Board of Directors remain committed to maintaining an investment grade credit rating and to its current annual dividend rate of $1.04 per share.

Deutsche Bank Securities Inc. and Moelis & Company LLC acted as financial advisors to Solutia on this transaction. Perella Weinberg Partners LP acted as financial advisors to Solutia's Board of Directors. In addition, the Valence Group, LLC conducted an independent evaluation of Solutia’s long range plan for Solutia’s Board of Directors. Kirkland & Ellis LLP acted as legal counsel to Solutia.

The transaction, which was approved by the Boards of Directors of both companies, remains subject to approval by Solutia’s shareholders and receipt of required regulatory approvals as well as other customary closing conditions. The transaction is expected to close in mid-2012.

Conference call and webcast

Eastman will host a conference call with industry analysts on January 27 at 8:00 a.m. Eastern Time. To listen to the live webcast of the conference call and view the accompanying slides, go to www.investors.eastman.com, Presentations. To listen via telephone, the dial-in number is (913) 312-1279, passcode number 8645015. A web and telephone replay will be available continuously from 9:00 a.m. Eastern Time, January 30, to 9:00 a.m. Eastern Time, February 9, 2012, at (888) 203-1112 or (719) 457-0820, passcode 8645015.

About Eastman

Eastman’s chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions. The company is committed to finding sustainable business opportunities within the diverse markets and geographies it serves. A global company headquartered in Kingsport, Tennessee, USA, Eastman had 2011 sales of $7.2 billion. For more information, visit www.eastman.com.

About Solutia

Notes to Editor: SOLUTIA and the Radiance Logo™ and all other trademarks listed below are trademarks of Solutia Inc. and/or its affiliates.

Solutia is a market-leading performance materials and specialty chemicals company. The company focuses on providing solutions for a better life through a range of products, including: Saflex® polyvinyl butyral interlayers for glass lamination and for photovoltaic module encapsulation and VISTASOLAR® ethylene vinyl acetate films for photovoltaic module encapsulation; LLumar®, Vista™, EnerLogic®, FormulaOne®, Gila®, V-KOOL®, Huper Optik®, IQue™, Sun-X™ and Nanolux™ aftermarket performance films for automotive and architectural applications; XIR® and Heat Mirror® performance films that are incorporated into aftermarket window films, laminated glass products and suspended insulated glass units for use in automotive and architectural applications. Flexvue™ advanced film component solutions for solar and electronic technologies; and technical specialties products including Crystex® insoluble sulfur, Santoflex® PPD antidegradants, Therminol® heat transfer fluids and Skydrol® aviation hydraulic fluids. Solutia's businesses are world leaders in each of their market segments. With its headquarters in St. Louis, Missouri, USA, the company operates globally with approximately 3,400 employees in more than 50 worldwide locations. More information is available at www.Solutia.com.

SolarBridge Technologies Partners with Solartec Energia Renovable to Introduce AC Modules to Mexico

AUSTIN, Texas--(BUSINESS WIRE)--SolarBridge Technologies (SolarBridge), the leading developer of module-integrated microinverters for the solar industry, announces a partnership with Solartec Energia Renovable (Solartec) to introduce AC modules to Mexico. Solartec will manufacture and sell AC modules powered by SolarBridge PantheonTM microinverters into the Mexican market.

Solartec’s S60MC is a 240-watt monocrystalline AC module that converts DC power from each solar module to grid-compliant AC power. The S60MC features a SolarBridge Pantheon microinverter that is factory-installed on the back of the module. The integrated assembly is backed by a single 25-year warranty. Solartec plans to begin shipping S60MC modules later this quarter.

Roof-readyTM AC modules powered by SolarBridge reduce field installation time by 20 percent and deliver up to 25 percent more energy harvest over central inverter-based systems. Integrated AC modules provide the lowest installed cost for rooftop solar, a powerful incentive for the burgeoning solar market in Mexico. Solartec’s S60MC is also certified by Mexico’s FIDE (Fideicomiso Para El Ahorro De Energia Electrica) as an energy-efficient product, qualifying system owners for additional rebates.

IMS Research has identified Mexico as a market with very high potential for future PV deployment and predicts it to become one of the fastest growing markets, with installations increasing at a rate of over 200 percent over the next four years.

“We are very pleased to be working with Solartec to introduce AC solar solutions to Mexico,” said Ron Van Dell, president and CEO of SolarBridge. “Plug-and-play AC modules are a very compelling product in such a rapidly growing market that has high solar irradiance.”

“SolarBridge has been an excellent partner in bringing the S60MC to market,” said Miguel Medina, general manager of Solartec. “Their innovative product design and high reliability made us confident that we could build the microinverter directly onto the module to offer what the Mexican solar market needs – easy, affordable solar solutions.”

SolarCity Appoints Toby Corey as Chief Revenue Officer

SAN MATEO, Calif.--(BUSINESS WIRE)--SolarCity®, a national leader in clean energy services, today announced the appointment of Toby Corey as chief revenue officer. Corey, co-founder and former president and chief operating officer of USWeb, Inc., will focus on transforming the ways in which consumers, businesses and government organizations can switch to cleaner energy at a lower cost, through a range of integrated solutions.

“It’s rare to find an executive that has such a strong track record in all the markets that SolarCity serves,” said Rive. “Toby has a deep passion for the environment and is committed to our continuing mission to make clean energy available at a lower cost than polluting energy.”

Corey helped grow USWeb/CKS into the world’s largest web development firm, with more than 5,000 employees, a $3 billion market capitalization and 25 percent of the Fortune 100 among its customer base. Prior to USWeb, he served as vice president at Novell’s $1.2 billion NetWare systems business. More recently, Corey co-founded and served as CEO of Intend Change, an incubator that launched more than half a dozen companies. Among those was Terravado, a provider of an employee-based environmentally-focused software service, where Corey also served as chairman and CEO.

“SolarCity completes a new clean energy project every 15 minutes of the workday,” said Corey. “This is a company that is changing the way we produce and use energy for the better, and I’m excited to be part of it.”

Corey actively supports a number of non-profits and charitable organizations, and currently serves on the board of directors of WildlifeDirect.org, Richard Leakey’s African Conservation Foundation and NorCal Telehealth, an organization that provides health education to underserved communities. He also teaches a course on entrepreneurship as an adjunct professor for Stanford University.

National Solar Power Announces Solar Farm Agreement with Liberty County, Florida

MELBOURNE, Fla.--(BUSINESS WIRE)--National Solar Power today announced the company has entered into a solar farm development agreement with Liberty County, Florida. Under the agreement, National Solar Power will build an up to 100MW solar energy project on property in Liberty County-–adjacent to the company’s Gadsden County, Florida solar farm project. The project, representing a $350 million investment at full build out, is the company’s third in Florida with the others being in Gadsden and Hardee counties.

“Florida is ripe with opportunities to establish successful solar-energy projects. We are thoroughly impressed with the high-level of enthusiasm we’re seeing from economic development, civic and elected leaders across the state,” said National Solar Power CEO James Scrivener. “We are grateful to the Liberty County community for the warm welcome it has extended to us and stand ready to work with our new partners to build our new network of farms and begin harvesting the power of the sun.”

Up to five 200-acre, 20MW farm segments are planned at a cost of $70 million each–-potentially injecting hundreds of millions of dollars in the Liberty County community.

National Solar Power estimates the project will create up to 100 jobs during the five-year construction phase and up to 25 permanent operations jobs. National Solar Power expects the farm will have a three-person maintenance crew, an engineer and security personnel for each 20MW farm segment and estimates the permanent operations jobs will have an average salary of about $40,000 per year.

Once the appropriate local and state permitting process is completed, the first phase of the project is expected to be up and running within six to seven months of breaking ground. Hensel Phelps Construction Co., a world leader in construction that rebuilt the Pentagon after the 9-11 attacks in 2001, will design, build and operate the Liberty County solar farm project for National Solar Power.

As part of the effort to fund its renewable energy infrastructure projects like the solar projects in Gadsden, Hardee and Liberty counties, National Solar Power recently announced the creation of Green Infrastructure Partners, LLC.

Green Infrastructure Partners offers a platform for Institutions and accredited investors to participate in the inevitable transition to a renewable energy infrastructure in the United States, while enjoying competitive risk adjusted returns on their capital. Green Infrastructure Partners, LLC is externally managed and advised by Solar Capital Management, LLC, a wholly owned subsidiary of National Solar Power Partners, LLC.

National Solar Power is negotiating with multiple large financial institutions and private equity investors to provide project financing. The company has entered into an agreement with Progress Energy Florida and is having discussions with other potential customers to purchase power generated by its Florida solar farm projects.

Along with the agreement with Progress Energy Florida, National Solar Power has executed power supply agreements for more than 3,000MW of solar farms in the Southeastern United States. National Solar Power anticipates much of the power produced by its solar farm projects will be used for peak shaving -- particularly energy production that will occur during the summer months.

A market leader in utility scale solar power solutions, National Solar Power is uniquely positioned within the marketplace to offer cost effective solar power solutions on the utility scale. With more than 30 years of industry experience, National Solar Power’s founders have been involved in the solar and utility energy marketplace and have witnessed renewable energy gaining in popularity and affordability. Learn more: www.natlsolar.com.

SolarCity, SunRun, Recurrent Energy, SunEdison Lead the Way as Solar Innovation Shifts to Installers

BOSTON--(BUSINESS WIRE)--With the solar energy industry maturing rapidly, and expanding to newer markets, the focus of innovation and investment has shifted from panels to installations — the final critical step for monetization, according to a Lux Research report titled, “Swimming Downstream: Evaluating Up-and-Coming Solar Installers and Developers.”

A flurry of M&A activity and an influx of venture capital dollars to solar service providers have led to innovation concentrated on creating new, lean business models in an extremely fragmented downstream landscape.

“Downstream start-ups raised over $1 billion, with SolarCity, SunRun, Recurrent Energy, SunEdison and Solar Power Partners leading the way,” said Matthew Feinstein, Lux Research Analyst and lead author of the report. “Solyndra raised a billion all on its own, but these downstream start-ups will achieve what Solyndra could not – success,” added Feinstein.

Lux Research assessed the leading players in the downstream market as it stands today, sorting out the high-potential innovators from undifferentiated “me-too” firms. Among their conclusions:

•     SolarCity dominates among residential installers. In the crowded residential installer/developer market, SolarCity is a standout performer – but can ill afford to be complacent as it expands in the northeast U.S. Many companies are partnering with SunRun, adding muscle to SolarCity’s biggest competitor. The Alteris-Real Goods Solar merger in December has added a stronger player to the market.
•     Commercial and utility-scale solar have few up-and-coming players. Tioga Energy and Enfinity lead the group of new large-scale developers. The acquisitions of Recurrent Energy, SunEdison, and Solar Power Partners led to concentration of large-scale development in the hands of larger companies or vertically-integrated suppliers First Solar and SunPower.
•     New entrants keep popping up on the back of venture dollars. A burst of entrepreneurial activity, driven by venture capital, is ensuring a steady stream of high-potential startups. In 2011, six solar installers were among Inc. Magazine’s top 50 fastest growing companies in the U.S., including Greenspring Energy, re2g, SunDurance Energy, OnForce Solar, and FLS Energy.

The report, titled “Swimming Downstream: Evaluating Up-and-Coming Solar Installers and Developers,” is part of the Lux Research Solar Systems Intelligence service.