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Dow Chemical Co. separates out from the Chlorine Business

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Published on : Dec 16, 2013

Dow Chemical Co. is now including its universal epoxy units and business in PVC production. Epoxy units are used to make feedstocks. The company has spun off its most significant portion of the chlorine value chain and emerged into this business with a value of $5 billion annual sales, with 11 manufacturing sites and almost 2,000 employees on board.

The efficient financial advisers at Dow Chemical Co. have discovered every separation alternative for their businesses including partnerships, spin-offs, potential ownership structures, and divestitures. The firm is expected to strike a deal within the next 12-24 months. 

On 2nd December, Dow officials along with Midland, Mich. –based Dow announced that the company assets are being created for company’s benefits and future transactions. Dow Chairman and CEO, Andrew Liveris said, the company is grateful to these businesses because it has served Dow for several decades, even in the low times when Dow had exited from the markets. Dow has considerably made an effort to right-size the upstream integration so that the project that they had started a decade ago could be focused upon with attention once again. 

Epoxy is used as a coating material and is better known as a thermostat resin. Dow has its epoxy business industrial plants in Roberta, Ga, and Freeport, Texas. They have also established other plants in three different countries, such as one in Brazil, two in Asia, and four in Europe. The spin-off includes the company’s chlor-vinyl, chlor-alkali, brine, and various chlorinated organic operations. The chlor-vinyl chemical units are used in making vinyl chloride monomer (VCM) for feedstocks. Feedstocks are used by firms involved in developing plastics to make PVC resin. The units are also used to make ethylene dichloride (EDC) to accomplish the same purpose.

According to a market analyst, Ana Gamboa – IHS Chemical in Houston, Dow trades most of its EDC and VCM units to the PVC makers across the globe. Gamboa also said that the spinning-off units could make a substantial profit from key market players outside of North America. Usually these market players take advantage of the energy costs and yearn to institute their footprint in the local regions. 

Moreover, Dow continues to grow and invest in the above businesses. The packaging franchise gains high attention in marketable skills, size, and leveraging technology. 

After the company’s spin-off, Pat Dawson – Dow executive will serve the company as the president of the epoxy business; while on the other hand, Jim Varilek will serve as the president of chlor-alkali and vinyl in the North America, and Clive Grannum as the president of the chlorinated organics. Although the ownership in certain sectors has been changed, however, this aspect should not affect the growth and management in Dow’s PVC feedstock assets. 

Dow’s industrial performance has charted graphs in various ways. Recently, it sold its polypropylene licensing and catalyst business to the W.R. Grace & Co. for an amount of $500 million. This particular sale had a PP catalyst plant in Norco, La. Furthermore, earlier this year, Dow also mentioned about selling its $600 million annual plastics additives business, but later it was reported that the unit was taken off the market because it received inadequate offers.

The initial nine months of 2013 for the company showed sales of $42.7 billion, but it went flat with the same period in 2012 posting a sale of about $57 billion. Today, Dow Chemical Co. ranks as the world’s largest chemicals and plastics makers making a double profit of $3.8 billion. The firm has 54,000 employees worldwide.

On December 5, Dow’s per-share price on Wall Street closed near to $38.60, which is more than 19 percent in 2013.