NEW YORK (TheStreet) Dow Chemical (DOW) on Monday detailed plans to carve out assets, including its century-old chlorine operation, as the company seeks to scale back its commodity exposure and focus on higher-margin units.
Midland, Mich.-based Dow in October said it hoped to raise at least $3 billion in asset sales in the coming years, and on Monday said the focus of much of that activity would be the chlorine operation, its oldest business. Dow said it has retained financial advisers to explore separation options for units totaling $5 billion in annual sales, with divestiture, spinoff and joint venture options to be discussed.
The announcement is the latest move in an ongoing transformation campaign by Dow that began with its 2008 purchase of Rohm and Haas Co. for $18.8 billion.
Company chairman and CEO Andrew N. Liveris in a statement called the chlorine announcement "a continuation of the shift of our company towards downstream high-margin products" that should generate better returns than more cyclical commodity products.
"These businesses have served us well over decades, but are serving markets that Dow has exited over time, and we are therefore right-sizing our upstream integration to match the downstream focus that we started a decade ago," Liveris said. "We believe different owners will be able to extract maximum value from these highly competitive assets and their related markets."
Dow said that any cash raised from asset sales will be redeployed "to maximize shareholder value."
The assets to be separated include about 40 manufacturing facilities at 11 sites spread across Texas, Louisiana, Europe, Asia and Brazil and employing about 2,000. The chlorine units represent about $4 billion in annual sales, with Dow also seeking options for its epoxy business and some energy and brine assets.