NEW YORK (TheStreet) --Shares of Dow Chemical Co. (DOW) - Get Report are higher by 4.10% to $48.78 in pre-market trading on Friday morning, after the manufacturer and supplier of products used as raw materials in the making of customer products and services, said it plans to spin off a portion of its chlorine business and merge it with Olin Corp. (OLN) - Get Report in a deal worth $5 billion.

This "transaction is highly complementary to the strategic objectives of both companies, with substantial synergies and significant potential to enhance value for both sets of shareholders," Dow said in a statement.

Once the merger is finalized Dow shareholders will receive approximately 50.5% of the shares of Olin, with existing Olin shareholders owning 49.5%.

"By combining Dow's world-class assets and people with Olin, we are creating a premier company with the scope and capabilities to optimally leverage long-term growth opportunities in the marketplace and generate significant shareholder value," Dow CEO Andrew Liveris said in a statement.

"We have jointly created a solid foundation for success for Olin, driven by the benefits of greater scale, an enhanced ability to capitalize on globally advantaged cost positions backed by U.S. shale gas economics, technology advantages, broader market access and significant envelope integration," Liveris continued.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "This is taking a page from when PPG (PPG) - Get Report spun off its commodity chemical company to Georgia Gulf which caused the stock to double over time and the same thing will happen here."

Separately, TheStreet Ratings team rates DOW CHEMICAL as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DOW CHEMICAL (DOW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
• Net operating cash flow has increased to $2,757.00 million or 23.46% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.94%.
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.8%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• The gross profit margin for DOW CHEMICAL is rather low; currently it is at 24.05%. Regardless of DOW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.69% trails the industry average.
• You can view the full analysis from the report here: DOW Ratings Report