The ratings on Eastman Chemical Co. reflect our assessment of the company's business risk profile as "strong" and financial risk profile as "significant" following its July 2012 $4.8 billion acquisition of Solutia Inc. This transaction added a substantial specialty chemical business with high and relatively stable operating margins to Eastman's portfolio of diverse chemical operations. We believe it enhances Eastman's competitive position through complementary technologies and accelerated access to high-growth markets, particularly in Asia. It also improves manufacturing site, product, geographic, and end-market diversity. Moreover, Eastman should benefit from increased overall size and scale, and lower capital intensity. Finally, this acquisition appears to offer the opportunity for meaningful tax and cost synergies. We regard the integration as having a high
