Dow Chemical to separate chlorine business

By Frank Esposito
Senior Staff Reporter

Published: December 2, 2013 11:42 am ET
Updated: December 6, 2013 1:57 pm ET

Image By: Dow Chemical Co. Andrew Liveris

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers
Companies & Associations Dow Chemical Co.

Dow Chemical Co. is spinning off what it calls “a significant portion” of its chlorine value chain, including its global epoxy business and units that make feedstocks used in PVC production.

The businesses to be spun off have annual sales of about $5 billion and employ almost 2,000 at 11 manufacturing sites worldwide. The assets “are being carved out for future transactions,” officials with Midland, Mich.-based Dow announced on Dec. 2.

“These businesses have served us well over decades, but are serving markets that Dow has exited over time,” Dow Chairman and CEO Andrew Liveris said. “We are therefore right-sizing our upstream integration to match the downstream focus that we started a decade ago.”

Dow has retained financial advisers to explore “all separation alternatives” for these businesses, including potential ownership structures and partnerships such as joint ventures, spin-offs and divestitures. The firm expects to execute a deal within the next 12-24 months.

“These transactions can be in pieces or on the whole of the announced scope,” the company said in a news release.

After the spinoff, Dow executive Pat Dawson will serve as president of the epoxy business, while Clive Grannum will be president of chlorinated organics and Jim Varilek will be president of chlor-alkali and vinyl in North America.

Dow’s epoxy business includes plants in Freeport, Texas; and Roberta, Ga.; as well as four plants in Europe, two in Asia and one in Brazil. Epoxy is a thermoset resin that is often used as a coating material. The spin-off also includes the firm’s chlor-alkali, chlor-vinyl, chlorinated organics and brine operations.

The chlor-vinyl unit makes ethylene dichloride (EDC) and vinyl chloride monomer (VCM) feedstocks that other plastics firms use to make PVC resin. Ana Gamboa — a market analyst with IHS Chemical in Houston — said Dow sells most of its North American VCM and EDC output to PVC makers in the region.

Gamboa added that interest in the units being spun off could come from market players outside of North America that wish to establish a footprint in the region and take advantage of low energy costs.

One industry veteran said that a change in ownership for Dow’s PVC feedstock assets “shouldn’t be disruptive” to the PVC market. Looking forward, he added that Dow’s packaging franchise “continues to get high attention in Dow, and is leveraging technology, size and market skills…the brands are market leaders [and] Dow continues to invest and grow those businesses.”

The source added that although Dow’s moves will take the firm away from some of its longtime businesses, the decisions “are rationale, justifiable and positive for long term profitability.”

Dow recently sold its polypropylene licensing and catalyst business to W.R. Grace & Co. for $500 million. That sale included a PP catalyst plant in Norco, La. Dow earlier this year also said it wanted to sell its plastics additives business — which has annual sales of about $600 million — but later took that unit off the market after receiving inadequate offers.

In the first nine months of 2013, Dow posted sales of $42.7 billion — flat with the same period in 2012. But the firm’s profit doubled to $3.8 billion in the same comparison.

Dow ranks as one of the world's largest plastics and chemicals makers. The firm employs 54,000 worldwide and posted sales of about $57 billion in 2012.

On Wall Street, Dow’s per-share price closed near $38.60 on Dec. 5 — up more than 19 percent so far in 2013.


Comments

Dow Chemical to separate chlorine business

By Frank Esposito
Senior Staff Reporter

Published: December 2, 2013 11:42 am ET
Updated: December 6, 2013 1:57 pm ET

Post Your Comments


Back to story


More stories

Image

2014 leaves some resin firms in the black while others struggle

January 23, 2015 2:37 pm ET

On the financial side, 2014 was good for Hexcel Corp., so-so for Celanese Corp. and it could have been better for Omnova Solutions.    More

Image

Clariant's ColorForward predicts future consumer trends

January 23, 2015 1:33 pm ET

Clariant International Ltd. is marking a decade of color forecasting with the 10th edition of its ColorForward program.    More

Image

The future for PolyOne is colorful

January 23, 2015 1:28 pm ET

PolyOne Corp. is writing four color stories for 2016.    More

Image

Mexico's Polymer Solutions looks to grow, expand offerings with name change

January 23, 2015 12:03 pm ET

British biodegradable additives developer Symphony Environmental Technologies plc's Mexico distributor has changed its name from Plásticos...    More

Image

W&H buys bigger stake in BSW

January 23, 2015 10:43 am ET

Windmoeller & Hoelscher KG will get more involved in flexible packaging machinery through its bigger stake in machinery maker BSW Machinery Handels-Gm...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events