Dow To Sell Polypropylene Licensing & Catalysts Unit To WR Grace For $500 Mln

(RTTNews) - Dow Chemical Co. (DOW) agreed Friday to sell its global polypropylene licensing & catalysts business to chemical conglomerate W. R. Grace & Co. (GRA) in an all-cash deal valued at $500 million. The deal, which is subject to regulatory clearance, is expected to close by the end of 2013.

"Today's announcement is another clear demonstration of Dow's rigorous focus on selectively shifting our portfolio away from assets that are no longer a strategic fit and optimizing their value," Dow's CEO Andrew Liveris said in a statement.

The sale includes Dow's polypropylene catalysts manufacturing facility at Norco, Louisiana, as well as customer contracts, licenses, intellectual property and inventory. The Norco assets are owned by Union Carbide Corp., a wholly-owned subsidiary of Dow Chemical.

The deal is part pf Dow's ongoing divestment agenda to raise more than $1.5 billion through focused actions by mid-to-late 2014. Dow intends to use the net proceeds from the divestitures toward its main priorities of remunerating shareholders, debt reduction and funding growth.

The deal will see about 90 Dow employees transitioning employment status to W. R Grace. The companies are working together for a seamless transition for all stakeholders, with W. R. Grace to honor all customer, licensing and supplier contracts and related agreements.

"The addition of Dow's world-class polypropylene products and process technology is a significant enhancement of Grace's market-leading catalysts franchise," Grace Chairman and CEO Fred Festa stated.

Dow had in mid-March identified its polypropylene licensing and catalysts business units as well as its plastics additives business units for divestment with a target to raise $1.5 billion in proceeds from asset sales over the next eighteen months.

Dow polypropylene licensing & catalysts offers technology for producing polypropylene, while Dow plastics additives supplies additives used in applications ranging from construction materials and packaging containers to consumer appliances and electronics, business machines and automotive parts.

Dow noted then that these actions will enhance its position in high-margin, fast-growing end-markets, while simultaneously optimizing the value of its assets.

Dow Chemical said the decision to divest the two units was a result of thorough, ongoing portfolio reviews in a slow-growth world. Since 2009, Dow has divested non-core businesses representing about $8 billion in revenue.

In October 2012, Dow Chemical said it will cut about 2,400 jobs, or 5 percent of its global workforce, and shut down about 20 manufacturing facilities as part of its efforts to further cut costs amid the global economic slowdown.

"Our accelerated strategy is focused on narrowing our market participation and preferentially funding our select growth businesses with strong competitive positions in attractive markets such as electronics, water, packaging and agricultural sciences. We are planning further proactive divestments in the next 12 months in our relentless pursuit of rewarding shareholders," Liveris added.

DOW closed Thursday's regular trading session at $40.40, up $0.56 on a volume of 7.77 million shares, and GRA closed at $88.03, up $1.19 on a volume of 0.38 million shares.