Eastman to Acquire McWhorter Technologies

<%=company1%> and McWhorter Technologies, Inc. today announced that their boards of directors have approved a definitive merger agreement under which Eastman will acquire the shares of McWhorter for approximately $200 million cash. Including debt, the transaction is valued at approximately $355 million.

Under the terms of the agreement, a wholly owned subsidiary of Eastman will commence a tender offer to purchase all outstanding shares of McWhorter common stock for $19.70 per share in cash. McWhorter's board of directors has recommended that McWhorter stockholders tender their shares. Following completion of the tender offer, Eastman will consummate a cash merger to acquire any shares not previously tendered. McWhorter has approximately 10 million shares outstanding.

The transaction, which will be accounted for as a purchase, is expected to increase Eastman's presence in the coatings, adhesives and specialty polymers product lines to approximately US$1.4 billion in annual revenues.
"This transaction represents another significant step in Eastman's strategy of pursuing growth opportunities for our specialty businesses, which offer faster growth and payback on investments, provide lower cyclicality and capital intensity and allow us to capitalize on our strengths," said Earnest W. Deavenport, Jr., chairman and CEO.

Allan Rothwell, president of the Chemicals Group at Eastman, said that he and his team are eager to complete the transaction and begin integrating the McWhorter and Eastman businesses. "We have identified a number of synergies that give us confidence that this acquisition will meet our financial and business goals," Rothwell stated. "Our current projections and assumptions show this acquisition will be accretive on a cash basis immediately and should turn accretive on an earnings basis during 2001."

He noted that previous transactions, including the acquisition of Lawter International in June of 1999, enhance the synergies of the McWhorter acquisition.

Jeff Nodland, McWhorter CEO, also expressed support for the merger. "This is a good transaction that brings two complementary businesses together," he said. "McWhorter and Eastman have had a similar focus on selling products to the coatings industry. We expect that our customers will benefit from this combination as we enhance the capabilities of both organizations to develop better products and services for the industry," he said. "Since our corporate cultures are similar, I expect that we will have an efficient integration of our businesses," Nodland concluded.

The tender offer is conditioned, among other things, upon a minimum tender of 50.1 percent of the outstanding McWhorter shares on a fully diluted basis and receipt of regulatory approvals. Chase Securities Inc. acted as the financial advisor to Eastman in connection with this transaction. Lehman Brothers served as financial advisor to McWhorter.

McWhorter is a leading manufacturer of specialty resins and colorants used in the production of consumer and industrial coatings and reinforced fiberglass plastics. Sales revenue for fiscal year ended October 31, 1999 was $444 million and EBITDA before non-recurring items was $47.5 million. The company was formed in 1994 when it was spun off from The Valspar Corp. and merged with the former resin products division of Cargill. McWhorter employment at 14 global sites is about 1,100. Its headquarters is located in Carpentersville, IL.

Headquartered in Kingsport, TN, Eastman manufactures and markets plastics, chemicals and fibers. The company employs 15,000 people in more than 30 countries and had 1999 sales of US$4.6 billion.

Edited by Mark Drukenbrod