KINGSPORT, Tenn. (AP) -- Industrial chemical maker Eastman Chemical Co. signed a deal to buy Sterling Chemicals Inc. for $100 million in cash, boosting Eastman's market share in more environmentally friendly plastic products.
News of the deal drove Sterling's stock up 60 percent in morning trading, while Eastman's stock rose slightly.
Eastman said the deal should add to its annual net income by the end of 2012. The purchase has been approved by the companies' boards of directors, but must receive regulatory and shareholder approval.
The deal is meant to boost Eastman's production of plastic products made without chemicals called phthalates. Environmental groups have criticized the use of phthalate products because of their effect on the environment. Eastman said North American and European sales of non-phthalate products will increase by 7 percent a year over the next five years.
Eastman said it will renovate and restart Sterling's currently idled plasticizer plant to make non-phthalate plasticizers.
"This acquisition supports our growth strategy for our plasticizer product line, and will enable us to keep pace with the growing demand for non-phthalate alternatives," Ron Lindsay, Eastman executive vice president, said in a statement.
Shares of Eastman Chemical rose 30 cents, or less than 1 percent, to $100.40 in morning trading. Sterling's stock jumped 92 cents, or 60 percent, to $2.45.
