labels: M&A, Chemicals
Dow Chemical sells off newly acquired Morton Salt for $1.675 billion news
02 April 2009

Dow Chemical announced a pact late Wednesday to sell one of the businesses it bought in the $16.5-billion Rohm & Haas deal, Morton International, for $1.675 billion in cash. Dow is selling the salt business to German agrichemicals firm K+S Aktiengesellschaft. (See: Cash-strapped Dow Chemical gets EC regulator's nod for Rohm and Haas acquisition)

The sale is part of Dow's plan to sell off non-core Rohm & Haas assets to pay down the hefty debt it had to take on to complete the purchase of the chemical maker, after a Kuwaiti company's cancellation of a planned joint venture deprived Dow of billions it had planned to use to buy Rohm & Haas. (See: Kuwait scraps $17-billion Dow deal)

"We are pleased that we reached an agreement with K+S at an attractive value in such a short period of time," said Dow Chairman and CEO Andrew N Liveris, in a statement. "This sale puts us ahead of schedule on our de-leveraging plan post the close of the Rohm and Haas acquisition."

The company said that the sale, together with prior actions such as slashing its dividend and negotiating better terms on its bridge loan, would trim Dow's bridge loan debt to about $7.5 billion from $13 billion. Dow said it has now almost replaced the $7.5 billion cash shortfall created by the failure of its Kuwaiti joint venture transaction to close.

K+S, meanwhile, said the deal should close by mid-year and should lift earnings per share from 2010. K+S said the deal for Chicago-based Morton, which had 2008 revenue of $1.2 billion and earnings before interest, tax, depreciation and amortization of $270 million, would create a global leader in salt, surpassing China National Salt Industry Corp.

"It extends and diversifies our geographic presence and enhances our positions in the North American consumer and industrial salt market," said K+S CEO Norbert Steiner. The German firm said it saw little overlap and said the deal will optimize logistics between Chile, Brazil and North America.

Kassel, Germany-based K+S makes fertilizers, as well as plant care and salt products. Its salt segment makes food-grade salt as well as products for industrial and chemical use and for road de-icing. The combined K+S will see its revenue from potash and magnesium products drop to 42.6 per cent from 50 per cent of the total, and its salt revenue rise to 25.8 per cent from 12.9 per cent of the total.

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Dow Chemical sells off newly acquired Morton Salt for $1.675 billion