Market and product
Dow to shut chlorine, caustic production in Texas; divest up to $5 bil in assets
The divestment includes about 40 manufacturing facilities at 11 sites,including the chlorine and caustic soda capacity in Freeport, Texas, andnearly 2,000 employees, Dow said.
"Today's announcement represents a continuation of the shift of ourcompany toward downstream high-margin products and technologies that customersvalue, and generate consistently higher returns than cyclical commodityproducts," Dow Chemical CEO Andrew Liveris said. "We are committed toprioritize our resources such that we maximize total shareholder return."
The assets included in what the company described as a "carve-out" areDow's chlor-alkali and chlor-vinyl facilities in Plaquemine, Louisiana, andFreeport, including Dow's interest in the Dow Mitsui Chlor-Alkali jointventure in Freeport.
Also on the block are its global chlorinated organics productionfacilities in Freeport, Plaquemine, and Stade, Germany as well as its globalepoxy business, including assets in Freeport, Roberta, Georgia; Rheinmuenster,Germany; Pisticci, Italy; Stade and Baltringen, Germany; Gumi, South Korea;Zhangjiagang, China; and Guaruja, Brazil.
The company's brine and select assets supporting operations in Freeportand Plaquemine, and energy operations in Plaquemine will also be divested.
Dow's caustic soda production in the Gulf Coast is estimated at 3.9million mt/year, according to Platts data. Confirmation of that total from thecompany was not immediately available.
The chlorine and caustic soda equivalent capacity being shut in Freeportwill be replaced with supply from new facilities that will come online withthe startup of the Dow Mitsui joint venture in early 2014, the company said.
The shuttering of capacity will help maintain Dow's balance and will becoordinated with the startup of the joint venture, the company said.
"These businesses have served us well over decades, but are servingmarkets that Dow has exited over time, and we are therefore right-sizing ourupstream integration to match the downstream focus that we started a decadeago," Liveris said.
"Separating these business units will allow us to further optimize theway they can be operated; and we believe different owners will be able toextract maximum value from these highly competitive assets and their relatedmarkets," he added.
Dow Chemical said it has retained financial advisers to explorealternatives for these businesses, including potential ownership structuresand partnerships such as joint ventures, spin-offs and divestitures, andexpects to execute transaction activities related to these businesses withinthe next 12-24 months.
Over the past 12 months, Dow Chemical has completed or announced similartransactions totaling $700 million, including the definitive agreement to sellits global polypropylene licensing and catalysts business to W.R. Grace & Co..
In anticipation of this separation, the company announced in October theexpansion of its divestiture target to $3 billion-$4 billion in proceeds overthe coming 18-24 months.
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