Dow to wholly own Dow Corning

The Dow Chemical Company has become the 100 percent owner of the silicones-maker Dow Corning, currently a 50:50 joint venture between Dow and Corning Corp. “The transaction is highly complementary to the strategic objectives of Dow and offers significant potential to enhance value for shareholders,” said Dow in a press release on December 11, 2015.
 
As per the deal, Dow and Corning will maintain their current equity stake in Hemlock Semiconductor Group – the US-based subsidiary of Dow Corning and the manufacturer of polysilicon for semiconductors and photovoltaics.
 
With Dow and Dow Corning coming together, Dow will extend its participation in consumer solutions and infrastructure solutions segments by increasing Dow’s product offerings in several attractive end use applications such as building and construction, consumer care, and automotive.
   
Dow is uniquely 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 and is expected to be accretive to operating EPS, cash flow from operations and free cash flow in the first full year after the close of the transaction.
 
The transaction structure enables Dow to maintain a net debt-to-equity ratio consistent with third quarter 2015 levels (prior to the closing of the sale of Dow’s US Gulf Coast chlor-alkali and vinyl, global chlorinated organics, and global epoxy business units to Olin Corporation), in line with the company’s focus of retaining an investment grade credit rating. The transaction is expected to close in the first half of 2016.
 
Andrew Liveris, chairman and chief executive officer, Dow, “Dow is the natural owner of Dow Corning. Fully aligned to our portfolio strategy, the addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow’s existing, strong science and engineering competencies across new chemistries.”