* Aims to raise $4.5 bln-$6 bln from asset sales by 2015-end
* Sees EBITDA in agriculture unit doubling to about $2 bln
in 5-7 years
(Adds analyst comments; updates shares)
By Swetha Gopinath
March 19 Dow Chemical Co said it aimed
to raise up to $6 billion from asset sales, $1.5 billion to $2.0
billion more than its earlier target, to focus on electronics,
agriculture and packaging.
Dow Chemical is under pressure from hedge fund titan Daniel
Loeb's Third Point LLC to spin off its lucrative but
slow-growing petrochemical unit and focus on specialty
materials, but the company is reluctant to split the two
The company has repeatedly defended its strategy of using
its commoditized raw materials businesses to keep costs down at
its high-growth specialty chemicals businesses.
"Dow appears committed to deliver more value than activist
investor Third Point's split-up proposal, which Dow opposes,"
said UBS Investment Research analyst John Roberts.
"Dow indicates a split could destroy about $1.5 billion to
$2 billion of integration value," he said.
Dow Chemical, which said in October that it would sell its
epoxy business and some chlorine and derivatives assets, said on
Wednesday it also planned to sell some non-core operations.
The company did not specify which assets, but said they
would likely be from its functional materials and performance
materials businesses - two of its slowest-growing operations.
Dow Chemical said it was also reviewing joint ventures for
"Dow has 86 JVs, most of which are small but collectively
could provide meaningful proceeds," Roberts said.
The company, which is seeking to lower its exposure to
volatile commodity prices, aims to complete the sale of assets
by the end of 2015.
"There are markets where we are minor ... We are
de-selecting markets and de-selecting small business," Chief
Executive Andrew Liveris said on a call to update shareholders
on the company's strategy. (r.reuters.com/pag77v)
"You can expect that these businesses are small, have good
EBITDA but where, frankly, we cannot grow," Liveris said from
Dow Chemical, like rival DuPont, is looking to
increase sales of seeds and pesticides, and has said its
genetically altered "Enlist" corn and soybean would be key to
driving profits in its agricultural sciences business.
The company said it expected earnings before interest,
taxes, depreciation and amortization (EBITDA) in the unit to
double to $2 billion in five to seven years.
Dow Chemical will provide an update on Sadara Chemical Co,
its joint venture with Saudi Arabian Oil Co, on
Sadara is slated to start production at a $19.3 billion
complex in Saudi Arabia in the second half of 2015.
Dow Chemical's shares were up about 1 percent at $50.20 in
afternoon trading on the New York Stock Exchange.
The stock has gained nearly 13 percent this year, while
DuPont's shares have risen 3 percent.
(Reporting by Swetha Gopinath in Bangalore; Editing by Savio
D'Souza and Kirti Pandey)