MIDLAND, Mich. — Dow Chemical Co. is breaking off a significant component of its chlorine operations in a deal with Olin Corp. valued at $ five billion.
Dow has been below stress from the hedge fund Third Point LLC to split its specialty chemical and petrochemical businesses.
Dow CEO and Chairman Andrew Liveris stated in a statement that the Olin deal has helped the Midland, Mich.-based corporation exceed its target to divest $ 7 billion to $ 8.five billion of non-strategic companies and assets.
Its stock rose $ 1.32, or two.8 %, to 47.76.
Dow mentioned it would join its chlor-alkali and downstream derivatives companies with Olin Corp. in a money-and-stock transaction. The transaction incorporates Dow’s Gulf Coast chlor-alkali and vinyl, international chlorinated organics, and worldwide epoxy companies.
The deal involves $ two billion of cash and cash equivalents to be paid to Dow an estimated $ two.2 billion in Olin popular stock and about $ 800 million of pension assumptions and other liabilities.
The new firm will have annual income of practically $ 7 billion.
Shareholders of Dow Chemical will obtain about 50.5 % of Olin’s stock, with existing Olin shareholders owning about 49.five percent.
Clayton, Mo.-based Olin said it anticipates annual cost savings of at least $ 200 million within three years.
Joseph Rupp will remain Olin’s CEO. Its board will involve the existing nine Olin directors and 3 new members to be designated by Dow.
Shares of Olin surged 14 % on the news.
The deal, which is targeted to close by year’s end, still needs approval from Olin shareholders.
Dow and Olin also announced a separate, 20-year long-term capacity rights agreement for the supply of ethylene by Dow to Olin.
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