The Dow Chemical Company detailed
the scope of a separation of a significant
portion of its chlorine value chain. These
assets are being carved out for future
transactions, and represent up to $5 billion of total annual revenue, inclusive of
sales on the merchant market and sales to
support Dow’s downstream, value-added
products. The scope includes approximately 40 manufacturing facilities at 11
sites, and nearly 2,000 employees.
“Today’s announcement represents a
continuation of the shift of our company
toward downstream high-margin products
and technologies that customers value,
and generate consistently higher returns
than cyclical commodity products. We
are committed to prioritize our resources
such that we maximize total shareholder
return,” said Andrew N. Liveris, Dow’s
chairman and chief executive officer.
“These businesses have served us well
over decades, but are serving markets
that Dow has exited over time, and we
are therefore right-sizing our upstream
integration to match the downstream focus that we started a decade ago,” Liveris
added. “Separating these business units
will allow us to further optimize the way
they can be operated; and we believe
different owners will be able to extract
maximum value from these highly competitive assets and their related markets.”
The announcement outlines a clearly
defined scope of businesses that are located in attractive regions and are backed by
a low-cost energy position attractive for
producers of chlorine-based chemicals
such as caustic soda and PVC. Further,
they are coupled with businesses that
command industry-leading positions with
world-scale assets and global capabilities.
Assets included in this carve-out are:
•Dow’s U.S. Gulf Coast Chlor-
Alkali and Chlor-Vinyl facilities in
Plaquemine, Lousiana, and Freeport,
Texas, including Dow’s interest in
the Dow Mitsui Chlor-Alkali joint
venture in Freeport, TX;
• Dow’s Global Chlorinated Organics
production facilities in Freeport,
TX; Plaquemine, LA and Stade,
Germany;
• Dow’s Global Epoxy business, including assets in Freeport, TX;
Roberta, GA; Rheinmuenster,
Germany; Pisticci, Italy; Baltringen,
Germany; Stade, Germany; Gumi,
South Korea; Zhangjiagang, China
and Guaruja, Brazil; and
• Dow’s brine and select assets sup-
porting operations in Freeport, TX
and Plaquemine, LA; and energy op-
erations in Plaquemine, LA.
In addition to these separation actions,
the company also announced that it will
shut down approximately 800,000 tons of
chlorine and caustic equivalent capacity in
Freeport, Texas. The capacity being shut
down will be replaced with supply from
new facilities that will come online with the
start-up of the Dow Mitsui joint venture in
early 2014. The shutdowns will help maintain Dow’s balances and will be coordinated with the start-up of the joint venture.
Building on Dow’s track record of
successfully completing complex carve-outs, Dow’s executive vice president Jim
Fitterling will oversee the separation and
transaction activities.
“Due to the highly integrated nature of
the chlorine value chain, we are conscious
not to leave any stranded costs or create
negative synergies,” said Fitterling. “Further,
we anticipate that any related transaction
or transactions will include supply and pur-
chase agreements between these units and the
company to support downstream products
aligned with Dow’s strategic market focus.”
In addition, the following leaders with
strong experience in the chlorine value
chain will lead the carved out businesses,
optimizing operations and ensuring busi-
ness success in anticipation of transaction:
• Pat Dawson, president – Epoxy
•Clive Grannum, president –
Chlorinated Organics
• Jim Varilek, president – Chlor Alkali
and Vinyl North America
Dow has retained financial advisors
to explore all separation alternatives for
these businesses, including potential own-
ership structures and partnerships such as
joint ventures, spin-offs and divestitures,
and expects to execute transaction activi-
ties related to these businesses within the
next 12-24 months. These transactions
can be in pieces or on the whole of the
announced scope.
In the past 12 months, Dow has completed or announced transactions totaling $700 million, including the recently
announced definitive agreement to divest
its global Polypropylene Licensing and
Catalysts business. In anticipation of this
separation, the Company announced in
October it had expanded its divestiture
target to $3 billion – $4 billion in proceeds over the coming 18 to 24 months.
In line with the company’s stated commitments, Dow expects to direct proceeds
of these transactions toward increasing shareholder remuneration, organic
growth investments and additional interest expense reductions.
Wacker to Expand
Dispersible Polymer
Powder Production
Capacity in Nanjing, China
Wacker Chemie AG plans to expand its
production capacity for dispersible polymer powders capacity at its Nanjing,
China site in 2014. By productivity improvement and debottlenecking measures
in existing facilities, the Munich-based
chemical company intends to essentially
double its current capacity of 30,000 metric tons per year to meet increasing customer demand in China. Debottlenecking
work is scheduled to start immediately
upon issuing of the necessary permission
by the local authorities. Wacker’s dispersible polymer powder production output
in Nanjing is expected to reach up to
Dow Details Scope for $5 Billion
of Commodity Chemicals Businesses
