Seeking Alpha: Eastman Chemical's Taminco Deals Looks Solid

I had been bullish on Taminco (NYSE:TAM) for a little while, seeing it as an undervalued specialty chemical company with a strong foundation in functional amines, specialty amines, and crop chemicals. Eastman Chemical (NYSE:EMN) apparently shared my feelings, as the company announced an acquisition last Thursday at the $26 fair value I indicated in my last piece.

While there is a 30-day "go shop" period for Taminco, I'm not counting on a rival bidder to emerge (though Taminco is a relatively rare quality asset), and I look for Taminco to further Eastman's decade-long transition toward a specialty chemical focus. The immediate upside for Eastman looks relatively modest (around 5%), but I wouldn't underestimate the added diversity, specialty markets, and synergy potential that Taminco will bring with it.

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Eastman Chemical's Taminco Deal Looks Solid

Seeking Alpha: Taminco Should Be Switching Over To Cash Generation

The ag chemical market has slowed, as seen recently at FMC (NYSE:FMC) and DuPont (NYSE:DD), but Taminco's (NYSE:TAM) strong market share and diverse end markets for its alkylamine products are serving the company pretty well. The shares have done okay since my mid-February write-up, rising about 10% and doing pretty well relative to direct rivals like DuPont and BASF (OTCQX:BASFY) and the Dow Jones Specialty Chemicals Index. I continue to believe that Taminco is a solid specialty chemical company with better growth and return on capital prospects than its peers, not to mention deleveraging potential, but the valuation is creeping up a bit and this looks more like a "buy on weakness" than outright buy right now.

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Taminco Should Be Switching Over To Cash Generation

Seeking Alpha: Taminco Isn't Your Typical Chemical Company

Specialty chemicals is a sector label that really doesn't tell investors all that much, as it includes a wide range of companies with very different end-markets and operating characteristics. That said, specialty chemicals do usually stand out as having above-average full-cycle returns than more commodity-oriented chemical companies. With that backdrop, I think Taminco (TAM) is worth a closer look as a pretty special specialty chemical company.

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Taminco Isn't Your Typical Chemical Company