The Old Economy met the New Economy on Thursday as

VerticalNet

(VERT)

, a developer of business-to-business Web sites, and

Eastman Chemical

(EMN) - Get Report

, a leading chemicals manufacturer, announced that they would jointly establish a business-to-business Internet company to sell paints and coatings on the Web.

The company, to be known as

PaintandCoatings.com

, is actually a spinoff of VerticalNet's

www.paintandcoatings.com

Web site.

"We are spinning it out and divesting it. It will have its own management team," said Mike Hagan, chief operating officer and co-founder of VerticalNet.

Hagan said in an interview that Eastman made a "multi-seven-figure investment" in the new company. This investment, as well as Eastman's commitment to bring its customer and sales volume to the site, should help the new company to book more than $10 million in revenue over the next 12 months, Hagan said.

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Hagan said that PaintandCoatings.com would now look to raise $10 million to $20 million over the next several months from strategic investors, including a possible additional investment from Eastman. An initial public offering is also in the offing for a later date, he added.

While www.paintandcoatings.com has not been one of VerticalNet's "absolute best" vertical communities, Hagan said that the $64 billion paints-and-coatings market offered a good opportunity for strong online business-to-business performance since it could help to aggregate customers' buying power.

"Paint and coatings is a very fragmented market," he said. "There are a lot of potential efficiencies."

Eastman has said it was interested in expanding into the business-to-business arena, having already formed partnerships with

Internet Capital Group

(ICGE)

,

webMethods

(WEBM)

,

Commerx

and

ChemConnect

. A spokesperson for Eastman was not immediately available for comment.

Eastman shares were trading up 1 point, or 2.5%, at 40 9/16 around midday Thursday. VerticalNet's stock was down 9 15/16, or 4.6%, at 207 3/8.