The Deal: W.R. Grace Acquires Dow Chemical Polymer Unit

NEW YORK (TheStreet) -- Dow Chemical (DOW)said Friday it has a deal in place to sell its global polypropylene licensing and catalyst unit to W.R. Grace (GRA)in a deal valued at $500 million.

The unit to be sold, known as Unipol, helps third parties produce and customize the popular plastic polymer used in numerous applications, including carpets and containers. Grace, of Columbia, Md., is already a supplier of polyolefin catalyst technology and said the purchase would "significantly" enhance its product portfolio.

"The agreement reflects Grace's continuing commitment to invest in our catalyst businesses, particularly in technology," Grace chairman and CEO Fred Festa said in a statement. "This acquisition strengthens our ability to provide polypropylene catalyst solutions to our customers around the world."

Assets in the deal include Dow's polypropylene catalysts manufacturing facility at Norco, La., licenses, intellectual property, inventory and customer contracts. About 90 workers are expected to transition to W.R. Grace as part of the deal, with the buyer also pledging to honor the unit's customer, licensing and supplier contracts.

The sale is part of a broader campaign by Midland, Mich.-based Dow to prune its portfolio and streamline its focus. The company in March announced plans to shed about $1.5 billion worth of assets by late 2014, and listed this polypropylene licensing and catalyst unit along with a plastics additives business as sale candidates.

Dow chairman and CEO Andrew N. Liveris called the sale "another clear demonstration of Dow's rigorous focus on selectively shifting our portfolio away from assets that are no longer a strategic fit and optimizing their value."

Liveris has presided over an ambitious campaign to use M&A to move Dow away from low-margin commodity businesses and towards higher-margin specialty products, including the company's $18.8 billion purchase of Rohm and Haas Co. in 2008 and subsequent divestiture of Morton Salt, Styron Corp. and other assets.

"Our accelerated strategy is focused on narrowing our market participation and preferentially funding our select growth businesses with strong competitive positions in attractive markets such as electronics, water, packaging and agricultural sciences," Liveris said.

Blackstone Advisory Partners LP advised Grace, as did Steven Epstein of Fried, Frank, Harris, Shriver & Jacobson LLP.

--Lou Whiteman in Atlanta.

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