Dow Chemical to sell part of chlorine business to Olin Corp for $5 bn

Dow Chemical Co yesterday said that it would separate a portion of its chlorine business and sell it in a tax-efficient way to Olin Corp in a cash-and-stock deal valued at $5 billion as part of its plan to focus on high-margin assets.

The $5-billion deal includes $2 billion in cash, and $2.2 billion in Olin stock, which Dow's shareholders will receive at closing. Olin will also assume $800 million in pension and other liabilities.

The merger will result in Dow shareholders receiving approximately 50.5 per cent of the shares of Olin, with existing Olin shareholders owning approximately 49.5 per cent.

The transaction is expected to close by 2015 end, and will create a company with revenue of about $7 billion and EBITDA of $1 billion.

''By combining Dow's world-class assets and people with Olin, we are creating a premier company with the scope and capabilities to optimally leverage long-term growth opportunities in the marketplace and generate significant shareholder value,'' said Andrew Liveris, Dow's chairman and CEO.

''This transaction is a natural fit to our strategic objectives - creating a sustainable, long-term growth platform and enhanced shareholder and customer value,'' said Joseph Rupp, Olin's chairman and CEO. ''Supported by significant integration and scale, premier low-cost assets, an upgraded and diversified product mix, and valuable network and other synergies, we will be able to better serve and grow with our customers.''

Dow Chemical, the largest US chemical maker by sales, had said in late 2013 that it would sell non-core assets worth $3 to $4 billion in order to create shareholders value. (See: Dow Chemical to divest non-core assets to raise $3 to $4 bn)

It had already divested non-core businesses worth about $9 billion in revenue since 2009.

With 2014 revenues of $2.2 billion, Montana-based Olin is a manufacturer concentrated in three business segments: Chlor Alkali Products, Chemical Distribution and Winchester.

Olin Chlor Alkali business has been for more than 100 years and is the fourth-largest producer in the North American market.  Chlor Alkali Products manufactures chlorine and caustic soda, hydrochloric acid, hydrogen, potassium hydroxide and bleach products.

Chemical Distribution manufacturers bleach products and distribute caustic soda, bleach products, potassium hydroxide and hydrochloric acid, while Winchester is in its 148th year of operation and its products include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.