Eastman Chemical to buy Solutia for about $3.4 billion

Eastman Chemical Co., the biggest U.S. producer of chemicals from coal, agreed to buy Solutia Inc. for about $3.38 billion to expand in materials for tires and in films used to make windshields and iPads.

Solutia’s investors will receive $22 in cash and 0.12 of an Eastman share for each of their shares, the companies said Friday.

Eastman, created when Eastman Kodak Co. spun off its film unit in 1994, said sales in the Asia-Pacific region will nearly double with its acquisition of St. Louis-based Solutia, the former chemical unit of Monsanto Co.

The cash and stock deal also will boost profit margins and sales to the auto market, said Jim Rogers, Eastman’s chief executive.

Solutia rose 41% to $27.52. Eastman, based in Kingsport, Tenn., climbed 7% to $50.41.

The takeover would be the largest in the diversified chemicals sector since April 2009, when Dow Chemical Co. bought chemicals maker Rohm & Haas Co. for more than $16 billion. There have been more than 90 deals of that type in the U.S. in the last five years, according to data compiled by Bloomberg.

Eight of the top 10 raw materials used by Solutia are made or purchased by Eastman, said Mark Costa, an Eastman executive vice president.

That will contribute to $100 million in cost savings that can be achieved by the end of 2013, Eastman said.

More than half of Solutia’s $2.1 billion in revenue comes from auto applications, mostly tire ingredients and windshield interlayers that prevent shattering. Both companies overlap in supplying architectural and auto markets.