Dow Announces Sale of Global Polypropylene Business to Braskem
July 28, 2011 - United States Of America
The Dow Chemical Company (NYSE: DOW) announced that it has signed a definitive agreement under which Dow’s global Polypropylene business will be divested to Braskem for a total enterprise value to Dow of $340 million, comprised of $323 million cash purchase price plus other cash and contingency assumptions of $17 million. Enterprise value multiple to Dow is 6.7x EBITDA(1). Dow expects to report a gain on this divestment, and the transaction is expected to close by the end of the third quarter 2011, pending regulatory approval. In addition to this transaction, the two companies will continue to evaluate potential future collaborations on growth opportunities in connection to their strategies.
“This divestiture is yet another strong example of Dow’s disciplined and ongoing approach to portfolio management and is directly aligned with our strategy to transform our Performance Plastics franchise to focus on downstream, technology-differentiated solutions,” said Andrew N. Liveris, Dow's Chairman and Chief Executive Officer. “This business has delivered historic margins that do not meet our expectations moving forward and is no longer core to Dow’s strategy. We are shifting our Plastics portfolio from a commodity focus to that of a performance focus. This divestment is directly in line with that strategy, and allows us to continue to focus on our three main priorities: retiring debt, remunerating shareholders and investing in our innovation agenda so that we deliver consistent earnings growth.”
The divestiture includes Dow’s polypropylene manufacturing facilities at Schkopau and Wesseling, Germany, and Freeport and Seadrift(2), Texas. Also included are inventory, business know-how, certain product and process technology and customer contracts and lists.
Approximately 200 employees are expected to transition employment status to Braskem at transaction close. Dow’s Polypropylene Licensing & Catalyst business and related catalyst facilities are excluded from the scope of the transaction.
Under terms of the purchase agreement, Braskem will honor customer and supplier contracts and related agreements. Both companies are committed to working together for a seamless transition for all stakeholders.
About The Dow Chemical Company
Dow (NYSE: DOW) combines the power of science and technology with the "Human Element" to passionately innovate what is essential to human progress. The Company connects chemistry and innovation with the principles of sustainability to help address many of the world's most challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing agricultural productivity. Dow's diversified industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 160 countries and in high growth sectors such as electronics, water, energy, coatings and agriculture. In 2010, Dow had annual sales of $53.7 billion and employed approximately 50,000 people worldwide. The Company's more than 5,000 products are manufactured at 188 sites in 35 countries across the globe. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.
“This divestiture is yet another strong example of Dow’s disciplined and ongoing approach to portfolio management and is directly aligned with our strategy to transform our Performance Plastics franchise to focus on downstream, technology-differentiated solutions,” said Andrew N. Liveris, Dow's Chairman and Chief Executive Officer. “This business has delivered historic margins that do not meet our expectations moving forward and is no longer core to Dow’s strategy. We are shifting our Plastics portfolio from a commodity focus to that of a performance focus. This divestment is directly in line with that strategy, and allows us to continue to focus on our three main priorities: retiring debt, remunerating shareholders and investing in our innovation agenda so that we deliver consistent earnings growth.”
The divestiture includes Dow’s polypropylene manufacturing facilities at Schkopau and Wesseling, Germany, and Freeport and Seadrift(2), Texas. Also included are inventory, business know-how, certain product and process technology and customer contracts and lists.
Approximately 200 employees are expected to transition employment status to Braskem at transaction close. Dow’s Polypropylene Licensing & Catalyst business and related catalyst facilities are excluded from the scope of the transaction.
Under terms of the purchase agreement, Braskem will honor customer and supplier contracts and related agreements. Both companies are committed to working together for a seamless transition for all stakeholders.
About The Dow Chemical Company
Dow (NYSE: DOW) combines the power of science and technology with the "Human Element" to passionately innovate what is essential to human progress. The Company connects chemistry and innovation with the principles of sustainability to help address many of the world's most challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing agricultural productivity. Dow's diversified industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 160 countries and in high growth sectors such as electronics, water, energy, coatings and agriculture. In 2010, Dow had annual sales of $53.7 billion and employed approximately 50,000 people worldwide. The Company's more than 5,000 products are manufactured at 188 sites in 35 countries across the globe. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.