More than a year ago The Dow Chemical Company (NYSE: DOW) today announced that it was planning to divest several billion dollars worth of non-strategic assets. In moving forward with Dow’s plans to divest $4.5 billion to $6 billion of non-strategic businesses and assets by 2015, the company confirmed on October 2nd that its Angus Chemical Company, Sodium Borohydride and AgroFresh businesses are all currently being marketed with actively interested parties. The firm anticipates finalizing these transactions in early 2015. Based on expert valuations, these businesses are expected to collectively sell for more than than $2 billion.
Other Dow Chemical divestment news
The Dow Chemical Company (NYSE: DOW) also announced it has finalized the sale of most of its North America rail car fleet, and plans to convert to a lease structure going forward. This step alone produced $450 million in cash proceeds.
The company also continues to move forward on the carve-out of its U.S. Gulf Coast Chlor-Alkali/Chlor-Vinyl, Global Chlorinated Organics and Epoxy divisions, which are projected to generate a total EBITDA of more than $500 million annually. A separate structure for the carve-out is being developed, with more details available in the near future. Of note, the carve-out has received significant market interest, with signed agreements expected in Spring 2015.
All transaction options will be carefully examined to ensure Dow receives maximum value for the businesses and its shareholders.
Dow’s completed divestitures add up to $1.3 billion so far, and the anticipated proceeds of the divestment program trending toward the higher end of the firm’s $4.5 billion to $6 billion range.
Update on joint venture restructurings
Furthermore, as was mentioned in Dow’s second quarter 2014 earnings call, the firm continues to work toward enhancing the value created through its major joint ventures by simplifying the structure and sharpening the focus of these partnerships.
One initial step in this direction is with Univation. The Dow Chemical Company (NYSE: DOW) has recently signed a definitive agreement with ExxonMobil Chemical Company regarding an ownership restructure of Univation Technologies, LLC. Currently a 50/50 joint venture, the proposed transaction will result in Univation Technologies becoming a wholly-owned subsidiary of Dow. Univation Technologies industry leading process knowledge will be a major addition to Dow’s Performance Plastics franchise and cement the firm’s leadership position in this rapidly growing sector.
