8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 2, 2012 (July 2, 2012)

EASTMAN CHEMICAL COMPANY

(Exact name of registrant as specified in its charter)

Delaware	1-12626	62-1539359
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS employer Identification No.)
200 South Wilcox Drive, Kingsport, TN		37662
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (423) 229-2000

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01. Completion of Acquisition or Disposition of Assets.

On July 2, 2012, Eastman Chemical Company (the “Company”) completed its previously announced acquisition of Solutia Inc. (“Solutia”), through the merger (the “Merger”) of Eagle Merger Sub Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), with and into Solutia, with Solutia surviving the Merger and becoming an indirect wholly-owned subsidiary of the Company. The Merger was effected pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated January 26, 2012, by and among the Company, Merger Sub and Solutia.

At the effective time of the Merger (the “Effective Time”), each share of Solutia common stock issued and outstanding immediately prior to the Effective Time (other than shares owned by Solutia as treasury stock and shares held by holders properly exercising appraisal rights) was canceled and converted automatically into the right to receive, in accordance with the terms of the Merger Agreement, (i) $22.00 in cash, without interest, and (ii) 0.12 shares of the Company’s common stock (together, the “Merger Consideration”).

Also at the Effective Time:

• each outstanding option to acquire shares of Solutia common stock issued under any of Solutia’s equity incentive plans (the “Plans”), whether or not then vested or exercisable, was cancelled and terminated in exchange for the right to receive, in cash, the amount by which the cash value of the Merger Consideration (using the five-day average trading price of the Company’s common stock ending on (and including) the trading day that was two days prior to the Effective Time) exceeded the exercise price for such option;

• restrictions on any restricted shares of Solutia common stock issued under any Plan lapsed and such shares became fully vested, and the holder thereof became entitled to receive, for each such restricted share, the Merger Consideration;

• each restricted stock unit issued under any Plan was converted into a vested right to receive, in cash, the value of the Merger Consideration (using the five-day average trading price of Eastman common stock ending on (and including) the trading day that was two days prior to the Effective Time); and

• restrictions on any performance share award or performance share unit award granted under any Plan (each a “Performance Share”) lapsed and such Performance Shares became vested based on no greater than the performance results for the applicable performance period according to the relevant award provisions, and the holder thereof became entitled to receive, in the case of each Performance Share in the form of restricted stock, the Merger Consideration and, in the case of each Performance Share award in the form of restricted stock units, the cash value of the Merger Consideration (using the five-day average trading price of Eastman common stock ending on (and including) the trading day that was two days prior to the Effective Time).

In addition, as of the Effective Time, each warrant to purchase shares of Solutia common stock (the “Solutia Warrants”) issued under the Warrant Agreement, dated February 28, 2008, between Solutia and the warrant agent named therein (the “Warrant Agreement”), was assumed by the Company and converted into a warrant to acquire, upon exercise, on substantially the same terms and conditions as were applicable to such warrant immediately prior to the Effective Time, the Merger Consideration (the “Eastman Warrants”).

The foregoing description of the Merger is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto, and is incorporated by reference herein.

The Company paid a total of approximately $2.7 billion in cash and issued 14,686,067 shares of its common stock to Solutia stockholders in the Merger. In addition, as a result of the assumption of the Solutia Warrants in the Merger, as of the Effective Time, there were 4,481,250 Eastman Warrants outstanding, which are potentially exercisable for an aggregate of up to 537,750 shares of the Company’s common stock.

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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

A portion of the cash component of the purchase price paid in the Merger was funded from borrowings, on July 2, 2012, of $1.2 billion under the Company’s previously disclosed Five-Year Senior Term Loan Credit Agreement, dated February 29, 2012, by and among the Company, the initial lenders named therein, Citibank, N.A., as administrative agent, Citigroup Global Markets Inc. and Barclays Capital Inc. (“Barclays”), as joint lead arrangers, and Barclays, as syndication agent (the “Term Loan”).

Additional information and details regarding the Term Loan are contained in Item 1.01 of the Company’s Current Report on Form 8-K filed on March 6, 2012, and the foregoing description of the Term Loan is qualified in its entirety by reference to the Term Loan filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 6, 2012.

Item 3.03 Material Modification to Rights of Security Holders.

The information regarding the Eastman Warrants contained above under Item 1.01 is incorporated by reference herein and is qualified in its entirety by reference to the Warrant Agreement, a copy of which is filed as Exhibit 4.1 hereto, and is incorporated by reference herein.

Item 7.01. Regulation FD Disclosure.

On July 2, 2012, the Company issued a press release announcing, among other things, the completion of the Merger. A copy of the press release is filed as Exhibit 99.1 hereto and is incorporated by reference herein.

In addition, also in connection with the completion of the Merger, Solutia repaid all amounts outstanding under its senior credit facility and issued notices of redemption to the holders of all of its 8 ³/4% Senior Notes due 2017 and 7⁷/₈% Senior Notes due 2020 (together, the “Notes”), and satisfied and discharged its obligations under the respective indentures relating to the Notes.

A copy of the press release issued by the Company announcing Solutia’s redemption of the Notes is filed as Exhibit 99.2 hereto and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The financial statements of Solutia required to be filed pursuant to this Item 9.01(a) have previously been filed as a part of, and are contained in, the Company’s Registration Statement on Form S-3, filed with the Securities and Exchange Commission (“SEC”) on May 18, 2012 (File No. 333-181549). Pursuant to General Instruction B.3 to Form 8-K, these financial statements are not additionally reported herein.

(b) Pro Forma Financial Information.

The pro forma financial statements required to be filed pursuant to this Item 9.01(b) have previously been filed as a part of, and are contained in, the Company’s Current Report on Form 8-K, filed with the SEC on May 18, 2012 (File No. 001-12626). Pursuant to General Instruction B.3 to Form 8-K, these financial statements are not additionally reported herein.

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(d) Exhibits. The following exhibits are filed with this report:

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of January 26, 2012, by and among Solutia Inc., Eastman Chemical Company and Eagle Merger Sub Corporation (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on January 30, 2012).
4.1	Warrant Agreement, dated as of February 28, 2008, by and between Solutia Inc. and American Stock Transfer and Trust Company, as Warrant Agent, including the related form of global warrant certificate (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, File No. 001-13255, filed by Solutia Inc. on March 4, 2008).
99.1	Press Release, dated July 2, 2012.
99.2	Press Release, dated July 2, 2012.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EASTMAN CHEMICAL COMPANY
By:	/s/ Brian L. Henry
Name:	Brian L. Henry
Title:	Assistant Secretary

Date: July 2, 2012

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated July 2, 2012.
99.2	Press Release, dated July 2, 2012.

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EX-99.1

Exhibit 99.1

Eastman Completes Acquisition of Solutia

Announces New Reporting Segments

KINGSPORT, Tenn., July 2, 2012 – Eastman Chemical Company (NYSE:EMN) announced today the completion of its acquisition of Solutia Inc. (NYSE:SOA). The approximately $4.8 billion acquisition supports Eastman’s growth strategy to increase revenues and profit margins by expanding the company’s geographic reach, especially in emerging markets, and establishing a more diverse and sustainable product portfolio. Eastman expects the acquisition to be immediately accretive to earnings, excluding acquisition-related costs and charges.

“We are pleased to complete this transaction and welcome Solutia to the global Eastman team,” said Jim Rogers, Chairman and Chief Executive Officer of Eastman. “The addition of these strong businesses, unique technologies, and highly differentiated products is expected to contribute strong cash generation and a solid return on capital to Eastman. We are confident this acquisition strengthens our position as a top-tier specialty chemicals company and establishes a powerful combined platform with significant opportunities for organic growth. We are committed to the successful integration of Solutia and look forward to delivering the projected growth and synergies from this combination.”

With the acquisition of Solutia, Eastman has made structural and reporting changes resulting in five reporting segments: Additives and Functional Products, Adhesives and Plasticizers, Advanced Materials, Fibers, and Specialty Fluids and Intermediates. This structure takes into consideration the strategies, operating models, and sales channels that the various businesses employ to be leaders in their respective markets.

• Additives and Functional Products consists of the rubber materials product lines from Solutia’s former Technical Specialties segment and the specialty polymers and solvents product lines of Eastman’s former Coatings, Adhesives, Specialty Polymers and Inks (CASPI) segment.

• Adhesives and Plasticizers consists of the plasticizer product lines of Eastman’s former Performance Chemicals and Intermediates (PCI) segment and the adhesives product lines formerly in its CASPI segment.

• Advanced Materials consists of Eastman’s former Specialty Plastics segment and Solutia’s former Performance Films and Advanced Interlayers segments.

• Fibers, which continues to consist of the acetate tow, acetate yarn, and acetyl product lines.

• Specialty Fluids and Intermediates consists of the specialty fluids product lines from Solutia’s former Technical Specialties segment and Eastman’s oxo and acetyl intermediates product lines of its former PCI segment.

Solutia’s Photovoltaics business will be managed as a developing business initiative and reported as “other” sales and operating earnings (loss).

The company will report third quarter 2012 financial results under the new reporting structure.

In conjunction with the realignment of its reporting segments, Eastman also announced the following changes in executive leadership responsibilities. Mark J. Costa, Executive Vice President, has responsibility for the Additives and Functional Products and Advanced Materials segments, and Ronald C. Lindsay, Executive Vice President, has responsibility for the Adhesives and Plasticizers, Fibers, and Specialty Fluids and Intermediates segments. Godefroy A. F. E. Motte is assuming responsibility for the company’s global supply chain and procurement as Senior Vice President, Integrated Supply Chain, Chief Regional and Sustainability Officer.

The closing follows the receipt of all necessary regulatory and other approvals, including approval of the transaction by Solutia stockholders on June 29, 2012. Pursuant to the terms of the merger agreement, Solutia stockholders are entitled to receive $22.00 in cash and 0.12 shares of Eastman common stock for each share of Solutia common stock. Eastman issued 14,686,067 shares of its common stock in the acquisition and, as a result of the assumption of outstanding warrants to purchase shares of Solutia’s common stock, has outstanding 4,481,250 warrants which are potentially exercisable for up to an aggregate of 537,750 shares of Eastman common stock and cash.

With the closing of the transaction, Solutia’s common stock and warrants will cease trading on the New York Stock Exchange as of the close of the market on July 2, 2012 and will no longer be listed on the NYSE. Beginning on July 3, 2012, Eastman’s warrants will trade on the NYSE under the symbol “EMN.W”.

Eastman is a global specialty chemicals company that produces a broad range of advanced materials, additives and functional products, specialty chemicals, and fibers that are found in products people use every day. As a world leader in the diverse markets it serves, Eastman is focused on delivering innovative and technology-based solutions while maintaining its commitment to safety and sustainability. Serving customers in approximately 100 countries, Eastman had 2011 pro forma revenues, giving effect to the Solutia acquisition, of approximately $9.3 billion. The company is based in Kingsport, Tennessee, USA, and, with the completion of the Solutia acquisition, now employs approximately 13,500 people around the world. For more information, visit www.eastman.com.

Forward-Looking Statements

This communication includes forward-looking statements subject to the safe harbor provisions of the federal securities laws. Forward-looking statements include, but are not limited to, statements regarding Eastman’s current expectations regarding the

expected benefits of the Solutia acquisition, integration plans and expected synergies therefrom, and Eastman’s anticipated future financial and operating performance and results, including estimates for general economic conditions and growth. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company’s filings with the Securities and Exchange Commission (“SEC”), including the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. Filings made by Eastman are available when filed with the SEC, on the Eastman web site at www.eastman.com in the Investors, SEC Information section.

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Contacts:

Media:  Tracy Broadwater

423-224-0498 / tkbroadwater@eastman.com

Investors:  Greg Riddle

212-835-1620 / griddle@eastman.com

EX-99.2

Exhibit 99.2

Eastman Announces its Wholly-Owned Subsidiary Solutia Inc.’s Redemption of Solutia’s 8-3/4%

Senior Notes due 2017 and 7-7/8% Senior Notes due 2020

KINGSPORT, Tenn., July 2, 2012 – Eastman Chemical Company (“Eastman” NYSE:EMN) announced that Solutia Inc. (“Solutia”), which on July 2, 2012 became a wholly owned subsidiary of Eastman, will redeem all of Solutia’s outstanding 8-3/4% Senior Notes due 2017 (the “8-3/4% Notes”) and all of Solutia’s outstanding 7-7/8% Senior Notes due 2020 (the “7-7/8% Notes” and, together with the 8-3/4% Notes, the “Notes”). In connection with Eastman’s completion of its acquisition of Solutia, Solutia has irrevocably deposited amounts with the trustee with respect to the 8-3/4% Notes and the 7-7/8% Notes sufficient to fund the redemptions and to satisfy and discharge the Notes.

On August 1, 2012 (the “Equity Claw Redemption Date”), Solutia will redeem (i) $129,000,000 in principal amount of the 8-3/4% Notes (the “8-3/4% Notes Equity Claw Redemption”), and (ii) $91,000,000 in principal amount of the 7-7/8% Notes (the “7-7/8% Notes Equity Claw Redemption”). Solutia will redeem (i) the 8-3/4% Notes at a redemption price of 108.750% of their principal amount, plus accrued and unpaid interest to, but not including, the Equity Claw Redemption Date, and (ii) the 7-7/8% Notes at a redemption price of 107.875% of their principal amount, plus accrued and unpaid interest to, but not including, the Equity Claw Redemption Date.

On August 2, 2012 (the “Make-Whole Redemption Date”), Solutia will redeem (i) the remaining $260,000,000 in principal amount of the 8-3/4% Notes outstanding after the 8-3/4% Notes Equity Claw Redemption, at a redemption price of 100% of their principal amount, plus the 8-3/4% Notes Applicable Premium (as defined below) and accrued and unpaid interest to, but not including, the Make-Whole Redemption Date, and (ii) the remaining $195,000,000 in principal amount of the 7-7/8% Notes outstanding after the 7-7/8% Notes Equity Claw Redemption, at a redemption price of 100% of their principal amount, plus the 7-7/8% Notes Applicable Premium (as defined below) and accrued and unpaid interest to, but not including, the Make-Whole Redemption Date. The “8-3/4% Notes Applicable Premium” means the greater of: (1) 1.0% of the principal amount of the 8-3/4% Notes and (2) the excess, if any, of (i) the present value at the Make-Whole Redemption Date of (a) 104.375%, plus (b) all required interest payments due on the 8-3/4% Notes through November 1, 2013 (excluding accrued but unpaid interest to the Make-Whole Redemption Date), computed using a discount rate equal to the Treasury Rate (as defined) as of the Make-Whole Redemption Date plus 50 basis points; over (ii) then outstanding principal amount of the 8-3/4% Notes. The “7-7/8% Notes Applicable Premium” means the greater of: (1) 1.0% of the principal amount of the 7-7/8% Notes and (2) the excess, if any, of (i) the present value at the Make-Whole Redemption Date of (a) 103.938%, plus (b) all required interest payments due on the 7-7/8% Notes through March 15, 2015 (excluding accrued

but unpaid interest to the Make-Whole Redemption Date), computed using a discount rate equal to the Treasury Rate (as defined) as of the Make-Whole Redemption Date plus 50 basis points; over (ii) then outstanding principal amount of the 7-7/8% Notes.

Eastman is a global specialty chemicals company that produces a broad range of advanced materials, additives and functional products, specialty chemicals, and fibers that are found in products people use every day. As a world leader in the diverse markets it serves, Eastman is focused on delivering innovative and technology-based solutions while maintaining its commitment to safety and sustainability. Serving customers in approximately 100 countries, Eastman had 2011 pro forma revenues, giving effect to the Solutia acquisition, of approximately $9.3 billion. The company is based in Kingsport, Tennessee, USA, and, with the completion of the Solutia acquisition, now employs approximately 13,500 people around the world. For more information, visit www.eastman.com.

Forward-Looking Statements

This communication may contain forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “may,” “will,” “intends,” “plans,” “estimates” or “anticipates,” or other comparable terminology, or by discussions of strategy, plans or intentions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, without limitation, statements regarding the redemption of the Notes; and any assumptions underlying any of the foregoing. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements.

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Contacts:

Media:  Tracy Broadwater

423-224-0498 / tkbroadwater@eastman.com

Investors:  Greg Riddle

212-835-1620 / griddle@eastman.com