The Dow Chemical Co. announced several updates regarding divestiture and portfolio management actions – demonstrating the company’s commitment to previously established targets and its ongoing focus on shareholder value creation.
In line with the company’s plans to divest $4.5 to $6 billion of non-strategic businesses and assets by 2015, Dow is now confirming that its Angus Chemical Co., Sodium Borohydride, and AgroFresh businesses are being actively marketed for divestment. The company expects to complete signing of these transactions by year-end 2014, and close in early 2015. Collectively, these businesses are expected to yield proceeds greater than $2 billion.
In addition, Dow announced it has now completed the sale of a substantial portion of its North America rail car fleet, moving to a lease structure going forward – an action that generated nearly $450 million in cash proceeds and reinforced the company’s commitment to identify alternative uses for capital.
Dow also continues to make solid progress on the planned carve-out of its U.S. Gulf Coast Chlor-Alkali/Chlor-Vinyl, Global Chlorinated Organics, and Epoxy businesses, which collectively are expected to generate EBITDA in excess of $500 million annually. Dow is now actively working to stand up the carve-out within a separate structure, with more details forthcoming. The carve-out is receiving strong interest from the market and firm indications of interest are expected before year end, with signed agreements expected in early 2Q15.
In all cases, transaction options will be examined to ensure Dow generates maximum value for the businesses and its shareholders.
To date Dow’s completed divestiture actions total $1.3 billion, and the expected proceeds of the entire program will now be at the higher end of the Company’s $4.5 to $6 billion range.
As announced during Dow’s 2Q 2014 earnings call, the company continues to assess opportunities to enhance the value created through its major joint ventures by simplifying the structure and focus of these partnerships and aligning them to Dow’s strategy.
The first such step is with Univation. Dow has signed a definitive agreement with ExxonMobil Chemical Co. regarding an ownership restructure of Univation Technologies LLC. Currently a 50/50 joint venture, Univation Technologies is the licensor of UNIPOL PE Process Technology and the leader in the development, manufacture, and sales of PE catalysts for the UNIPOL PE Process – highly differentiated market-aligned solutions. This transaction will result in Univation Technologies becoming a wholly-owned subsidiary of Dow. A valuable, high-margin business, Univation Technologies will enhance Dow’s industry-leading Performance Plastics franchise – further strengthening its leadership position in this high-demand technology.
Further, the company is working rigorously to rationalize its position in joint ventures that – while valuable – no longer align with Dow’s strategy. More details are forthcoming by year-end 2014.
Commenting on today’s announcements, Dow’s chairman and chief executive officer Andrew N. Liveris said, “Dow’s strategy of being low cost, integrated in key products and adding value through technology in its markets, all the while applying a best owner mindset to our portfolio, is on display with these updates and announcements.
“Through the actions we have taken and the plans in progress, we will have divested more than $14 billion in non-strategic businesses since 2009, while at the same time adding $18 billion in revenue via acquisitions and organically through targeted R&D, thus proving our complete focus on further accelerating Dow’s continued commitment to going deeper into attractive end-markets within its integrated value chains and products – all while enhancing return on capital and driving TSR even higher. In fact, our consistent execution against the plans we have firmly set has resulted in the Company’s achievement of TSR increases above the S&P Chemicals and S&P 500 on a 1-, 3-, and 5-year basis – with more upside on the way.”
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