On Monday, Dow Chemical disclosed its plans to exit from some of its assets worth USD5 billion. Should the industrial group succeed, it would be the company's latest efforts to make its business leaner. The Midland, Michigan-based company, however, had not revealed how it intends to exit from its assets, which include epoxy businesses, brine operations and chlorine production facilities. Dow said though that it had tapped advisers to aid the company in its exit.
Dow chief executive Andrew Liveris said in October that the company planned to dispose USD3 billion to USD4 billion in assets. Analysts at that time, said The New York Times' The DealBook projected that the amount could grow.
Liveres said today, "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."
Dow in the last year made its first steps into making its businesses simpler. It sold its global polypropylene licensing and catalysts business recently, which was part of its USD700 million divestiture strategy over the past 12 months. The Post noted however, that Dow's disposal of its chlorine, epoxy and brine businesses indicated the company's most significant step to date.
Dow executive vice president James Fitterling, who also will oversee the asset disposals, said, "We anticipate that any related transaction or transactions will include supply and purchase agreements between these units and the company to support downstream products aligned with Dow's strategic market focus."
Although it experienced a 21% increase in the stock market this year thanks to the stock rally, Dow was still outperformed by rival DuPont, which was also working to streamline its businesses as well. The large industrial conglomerate's shares jumped 36% this year, despite activist investor Nelson Peltz pressure. DuPont said in October that it will be spinning off its performance chemicals unit as a new, publicly-traded company. This came after it sold its performance coatings business for USD4.9 billion last year.
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