Dow Chemical Co. has signed definitive agreements to restructure the ownership of Dow Corning Corp., its silicone joint venture with Corning Inc.
Under the terms of the agreement, Dow will acquire Corning's 50 percent stake in the joint venture and become the 100 percent owner of Dow Corning, Dow said in a Dec. 11 news release. Dow and Corning will maintain their current equity stake in Hemlock Semiconductor Group.
The transaction is subject to customary closing conditions, including relevant tax options and regulatory approvals. Dow said closing is expected by mid-2016 and that Dow Corning will continue to operate as a separate, active business.
Dow said with full control of the joint venture, it will extend its participation in Consumer Solutions and Infrastructure Solutions segments by increasing its product offerings in several attractive end use applications — such as building and construction, consumer care and automotive.
Dow is positioned to capture $400 million in run rate annual cost and growth synergies from the restructured ownership of Dow Corning. The transaction is expected to yield more than $1 billion in additional annual EBITDA at full run-rate synergies.
The firm said synergies will be delivered anywhere between 24 to 36 months after the deal's closure.
“This transaction is another milestone aligned to Dow's strategic agenda to provide clarity on our joint ventures and demonstrates our ongoing and relentless focus on creating shareholder value,” Andrew Liveris, Dow chairman and CEO, said in the release. “Today represents the transition of a very successful 72-year partnership between Dow and Corning, and our strong relationship with Corning will continue through Hemlock Semiconductor.”
Dow's presentation said that Dow Corning's silicones business lies outside Corning's three core technologies and four manufacturing and engineering platforms at the core of its strategy and capital allocation framework.
For 2014, Dow Corning posted net profit of $513 million on sales of $6.22 billion, according to information posted on its website. It employs 11,000 worldwide at 62 manufacturing sites and offices.
Dow Chemical reported annual sales of more than $58 billion and employs about 53,000 at 201 sites in 35 countries.