Dow Chemical Co (DOW.N) will sell its polypropylene licensing and catalysts business to smaller peer W.R. Grace & Co (GRA.N) for $500 million as the U.S. chemical maker looks to shed its non-core businesses.
The sale is a part of Dow Chemical's plan to sell non-core businesses worth about $1.5 billion by next year.
The business provides technology and catalysts to make polypropylene, used to manufacture plastics and synthetic fabrics.
W.R. Grace shares were up 2 percent on Friday morning on the New York Stock Exchange.
Under the deal, W.R. Grace will acquire Dow Chemical's polypropylene catalysts manufacturing plant at Norco, Louisiana and customer contracts, licenses, intellectual property and inventory.
Dow Chemical Chief Executive Andrew Liveris said the company would divest more businesses in the next 12 months and focus on making high-margin products for markets such as electronics, water, packaging and agriculture.
Like bigger rival DuPont (DD.N), the company is focusing on agriculture products such as biotech seeds and pesticides, the demand for which is being driven by an expanding global population.
DuPont said in July that it plans to exit its titanium paint pigments business to concentrate on its agriculture products unit.
Dow Chemical, which has divested non-core businesses worth about $8 billion in revenue since 2009, has said it would consider selling its epoxy, construction and chlorine businesses.
About 90 Dow Chemical employees are expected to move to W.R. Grace, which makes specialty catalysts and additives used by petroleum refiners.
W.R. Grace said it expected the transaction to close by the end of the year, pending regulatory approvals.
(Reporting by Garima Goel in Bangalore; Editing by Sriraj Kalluvila and Kirti Pandey)