August 27, 2014 / 4:41 PM / 5 years ago

Exclusive: Dow hires banks to sell two chemical units - sources

NEW YORK (Reuters) - Dow Chemical Co (DOW.N) has kicked off processes to sell two of its specialty chemicals subsidiaries that could fetch close to $2 billion combined, according to people familiar with the matter, part of its effort to divest several billion dollars worth of non-core assets by 2015.

Dow has hired investment bankers including Morgan Stanley (MS.N) to sell its Angus Chemical Co subsidiary, as well as AgroFresh Inc, the people said on Wednesday, asking not to be named because the matter is not public.

Those two units are in addition to the epoxy business and some chlorine and derivatives assets that Dow previously said it has earmarked for sale.

The move to put additional assets on the block underscore Dow’s stated effort to divest less lucrative businesses and return more money to shareholders in the face of increasing investor pressure. Midland, Michigan-based Dow makes everything from insecticides to plastics.

Dow’s Angus Chemical Co, based in Buffalo Grove, Illinois, is a wholly owned subsidiary that makes additives used in a variety of products including paints, personal care and cosmetics and life science utilities.

That business has earnings before interest, taxes depreciation and amortization (EBITDA) of around $115 million and could be sold for more than 10 times that amount, some of the people said.

Philadelphia-based AgroFresh, another wholly owned Dow subsidiary up for sale, makes products used to enhance the freshness, quality and value of fresh produce.

Its flagship product is the SmartFresh Quality System, a freshness protection technology proven to maintain firmness, texture and appearance of fruits during storage and transport, according to its website.

This unit has $50 million to $60 million of annual EBITDA and would also likely be sold for more than 10 times that number, the people said.

Those businesses, both in the early stage of sale processes, are expected to attract interest from other chemical companies as well as private equity firms, according to the people familiar with the matter.

In addition to Morgan Stanley, Dow is also getting advice from former Citigroup banker Michael Klein on the disposals, the people said.

Dow did not respond to a request for comment. Morgan Stanley declined to comment, while Michael Klein could not be immediately reached for comment.

Activist investor Daniel Loeb has urged Dow to separate its commoditized raw materials businesses from its specialty chemicals operations - demands Dow has repeatedly rejected saying that keeping the businesses together helps curb costs.

However, the company has said it is looking to raise as much as $6 billion through asset sales.

Reporting By Mike Stone and Soyoung Kim in New York, additional reporting by Greg Roumeliotis; Editing by Cynthia Osterman

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