) continues to seek opportunities to optimize its portfolio by
selectively spinning off or selling its assets. The chemical
giant is planning to exit a major portion of its chlorine
business that has been in operation for over 100 years. Commodity
chemicals assets that are being identified for separation
represent up to $5 billion in revenues and includes roughly 40
manufacturing plants across 11 sites.
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The move is in sync with the Midland, MI-based company's
portfolio management plans and its strategy to focus on
high-margin, fast-growing businesses, including agriculture and
electronics, that deliver greater returns than cyclical commodity
Assets to be carved out include Dow's U.S. Gulf Coast
Chlor-Alkali and Chlor-Vinyl facilities, global chlorinated
organics production facilities, global Epoxy business and brine
and select assets supporting operations in Freeport, TX and
Plaquemine, LA, as well as energy operations in Plaquemine.
Separately, Dow also divulged its plans to shutter roughly
800,000 tons of chlorine and caustic equivalent capacity in
Freeport. Supply from new plants that are scheduled come on
stream with the start-up of Dow's joint venture with Mitsui early
next year will replace the capacity being shut down.
Jim Fitterling, Dow's Executive Vice President, will oversee the
separation activities. The company has retained financial
advisors to explore all separation alternatives (including
spin-offs, divestitures and joint ventures) for these assets and
plans to carry out transaction activities for these businesses
within the next 12-24 months.
Investors reacted positively to the news as Dow's shares rose as
much as 3.3% in the trading session yesterday. The stock
eventually closed at $39.98, gaining around 2.4% for the day.
Dow's shares are up roughly 27% so far this year.
Dow, a Zacks Rank #3 (Hold) stock, continues to face challenges
in Europe due to soft economic conditions in the region. In the
Performance Materials segment, the Epoxy business is struggling
with underperformance amid tough competition and industry
Dow continues to seek opportunities to optimize its portfolio by
selectively divesting underperforming assets that are exposed to
raw material price fluctuations. The company, in October, signed
an agreement to divest the polypropylene licensing catalyst
W. R. Grace & Co.
) for $500 million. W. R. Grace closed the takeover yesterday.
Dow has jettisoned non-core assets worth roughly $10 billion
since 2009. It has completed or announced transactions totaling
$700 million over the last twelve months.
CEO Andrew N. Liveris, in third-quarter 2013 earnings call, said
that the company plans to mop up at least $3 billion to $4
billion from non-core asset sales over the next 18-24 months,
above the prior expectations of $1.5 billion. Proceeds from these
transactions are expected to be used for boosting shareholder
returns, reducing interest expenses and organic growth
Dow is also aggressively pursuing its cost reduction and
efficiency programs. As part of the move, the company is slashing
headcount, shuttering plants and pruning capital spending on
) is also actively engaged in sell/spin-off of its low-margin
businesses as part of its strategy to gradually shift focus to
high growth businesses. DuPont is spinning off its struggling
performance chemicals unit as well as glass laminating solutions
and vinyls business as part of the move. The company, earlier
this year, sold its performance coatings business to equity firm
The Carlyle Group
) for $4.9 billion.