* Asset sale part of plan to shed assets worth $3 bln-$4 bln
* Exiting position as No. 1 chlorine producer
* Other assets include epoxy, and some brine and energy
* Shares rise 3 pct
By Sayantani Ghosh
Dec 2 Dow Chemical Co said it would sell
a bulk of its chlorine operations - its oldest business - as
part of its plan to sell or spin off commodity chemicals assets
worth up to $4 billion.
Dow Chemical, like other U.S. chemical makers such as Dupont
, is moving away from providing a wide range of products
to a swathe of industries to focus on electronics, packaging and
"Exiting our longest, oldest business tells you that we are
prioritizing our capital on higher margin, more consistent
earnings growth businesses," Dow Chemical Chief Executive Andrew
Liveris told Reuters.
Other assets identified for sale by the world's No.1
chlorine producer on Monday included its epoxy business and some
brine and energy assets, representing a total of $5 billion in
The bulk of what the company plans to sell is housed in its
performance materials business, which is particularly exposed to
swings in commodity prices.
Dow Chemical said in October it expected to raise between $3
billion and $4 billion from asset sales in the next 18 to 24
It had said the company would sell parts of its chlorine and
derivatives assets such as chlorinated organics - used in
electronics and refrigerants - and vinyls, used to make a raw
material for water pipes.
The largest U.S. chemical maker by sales has shed non-core
businesses representing about $10 billion in revenue since 2009,
including its Styron plastics business that it sold to
private-equity firm Bain Capital Partners for $1.63 billion in
It sold its polypropylene licensing and catalyst business in
October to smaller rival W.R. Grace & Co for $500
The company said in August that it was looking at options
for its European construction materials businesses.
Dow Chemical, which gets a quarter of its revenue from the
performance plastics business, has also reduced its exposure to
lower margin plastics and now focuses on plastics used in
sophisticated packaging, diapers and wound-care products.
The company's shares rose nearly 3 percent to $40.04 by
midday on the New York Stock Exchange. The stock has risen 30
percent over the past year.
Dow said on Monday it would shut about 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 in early 2014 with the
start-up of the company's chloralkali joint venture with Japan's
Mitsui & Co.
The news lifted shares of chloralkali suppliers such as
Axiall Corp, Olin Corp and Westlake Chemical
"The announcement lifts a major overhang on the chloralkali
industry and respective players, as the potential of
overcapacity has kept many investors concerned over the future
supply/demand balance," Wells Fargo analyst Frank Mitsch said.
Dow Chemical, however, is looking to sell its interest in
the joint venture as part of this reorganization and will
eventually buy a small amount of chlorine from the new owners of
the JV after it divests its interest.
"We are not disposing of all the chlorine because we are
retaining chlorine for our value add downstreams. We are only
exiting that which is servicing the commodity part of chlorine"