Dow Takes Full Ownership of Dow Corning
Dow Chemical has signed agreements to restructure its 50:50 joint venture with Dow Corning and take 100% ownership of the silicon company. Dow’s board of directors has unanimously approved the move which it described as “highly complementary” to the company’s strategic objectives.
It was at first unclear whether the move was designed to clarify corporate structure in the run-up to the just-announced merger with DuPont or whether Dow planned to sell the business to a third party.
Under the terms of the agreement, Dow Corning will receive $4.8 billion in cash and a 40.25% ownership in Hemlock Semiconductor Group, a leading polysilicon manufacturer. Hemlock Semiconductor is owned by several joint venture companies, and majority-controlled by Dow Corning.
The transaction, which remains subject to customary conditions including regulatory approvals, is expected to close in the first half of 2016. The move will expand Dow’s offerings in several attractive end-use markets such as building and construction, consumer care and automotive.
Howard Ungerleider, Dow’s vice chairman and chief financial officer, said this demonstrates the company’s continued focus on investing in value streams that will deliver profitable growth aligned to high-margin end-use markets.
As a result of the restructure, Dow is expecting to capture $400 million in annual run-rate cost and growth synergies, as well as more than $1 billion in additional annual EBITDA.
Dow Corning, which had revenues of $6.2 billion in 2014, will keep its headquarters in Auburn, Michigan, USA.
