Dow Plans $5 Bln. Spin-off, Sale Of Commodity Chemicals Business - Update

(RTTNews) - Dow Chemical Co. (DOW) said Monday it plans to separate a major part of its chlorine value chain in a bid to streamline its operations and move away from cyclical commodity products.

The assets being separated contribute $5 billion in annual revenue, inclusive of sales on the merchant market and sales to support Dow's downstream, value-added products.

Dow plans to separate the assets via joint ventures, spin off or sales, and expects to execute these in the next 12 to 24 months. The scope of the separation includes nearly 40 manufacturing facilities at 11 sites, and around 2,000 employees, said the Midland, Michigan-based company.

In a statement, CEO Andrew Liveris said the move is part of shfit toward downstream high-margin products and technologies.

Assets in the carve-out include its U.S. Gulf Coast Chlor-Alkali and Chlor-Vinyl facilities in Plaquemine, Louisiana, and Freeport, Texas; Global Chlorinated Organics production facilities; and Global Epoxy business. It also includes its brine and select assets supporting operations in Freeport and Plaquemine.

Also, Dow said it will close about 800,000 tons of chlorine and caustic equivalent capacity in Freeport, Texas, which would be replaced with supply from new facilities that would come with the start-up of the Dow Mitsui joint venture in early 2014.

Dow, like its bigger rival Dupont (DD), is streamlining its operations to focus on electronics, packaging and agriculture.

In October, Dow said it expected to raise between $3 billion and $4 billion from asset sales in the next 18 to 24 months.

In the past 12 months, Dow has completed or announced transactions totaling $700 million, including a deal to divest its global Polypropylene Licensing & Catalysts business.

In October, Dow said it will cut about 2,400 jobs, or 5 percent of its global workforce, and shut down about 20 manufacturing facilities as part of its efforts to further cut costs amid the global economic slowdown.

The company had reported a higher third-quarter profit, as sales increased mainly driven by Agricultural Sciences segment, while a slump was seen at its Performance Materials business.

Dow stock is trading at $40.00, up $0.94 or 2.40%, on a volume of 4.7 million shares on the NYSE.