Courtesy of Benzinga.
The Dow Chemical Company (NYSE: DOW) disclosed the successful completion of its transaction to restructure the ownership of Dow Corning. Dow Chemical is now the full owner of Dow Corning’s silicones business. In 2015, it had revenues of more than $4.5 billion and is predicted to add more than $1 billion of annual EBITDA for Dow at full run-rate synergies.
The Dow Chemical said that the transaction represented a post-synergy multiple of less than 6x EBITDA, highlighting the unique value creation to its shareholders from acquiring 50 percent of the silicones business while gaining from 100 percent of the synergies.
The company’s chairman and CEO, Andrew Liveris, said, “Dow Corning’s world-leading silicone position brings a complementary new chemistry and technology to Dow, with it being a hand-in-glove, strategic fit for our material sciences portfolio and based on the additional $1 billion of EBITDA to Dow’s bottom line at full run-rate synergies, which at $400 million is the minimum we expect to achieve, this transaction is highly accretive for our shareholders.”
He continued further to say, “As an owner of Dow Corning for more than seven decades, our deep understanding of common and adjacent markets we serve will enable us to go narrower and deeper into high growth businesses where innovation is rewarded with value. By linking our two robust innovation engines, we will bring greater value to our shareholders and a wider range of differentiated, high value solutions to our customers.”
Dow said that both would maintain their equal proportional equity interests in Hemlock Semiconductor Group, a polysilicon producer where Dow Corning was the majority shareholder.
The company said that the highly synergistic transaction extended its participation in its Consumer Solutions, as well as, Infrastructure Solutions segments, providing immediate integration into its monomer and polymer value chains. The chemical firm said that it also enabled it to offer complementary technology offerings in attractive industry segments where Dow is already a leader currently like building and construction, consumer care, transportation, packaging, and electronics.
