Dow Chemical to further divest portfolio - CEO

12 November 2009 15:46  [Source: ICIS news]

Dow CEO Andrew LiverisTORONTO (ICIS news)--Dow Chemical remains committed to further divestments to reduce debt, chief executive Andrew Liveris said on Thursday in outlining options worth about $12bn (€8bn).

“Divestitures remain a key priority for our company,” he said in a speech during the company’s investor day.

“We will continue to prune the portfolio to reduce debt and further enhance our earnings power,” he said.

Year to date, Dow already achieved $3.4bn in divestitures, against its 2009/2010 target of $5bn-6bn, he said.

Liveris outlined three concurrent divestment paths, involving about $12bn worth of options for Dow.

The first path includes up to $3.5bn divestments of non-strategic businesses, Liveris said.

This path includeds the previously announced Styron Corporation, “plus an additional 10-15 other non-strategic businesses that do not fit our long-term growth profile,” Liveris said.

The targeted non-strategic divestments vary in size from roughly $100-300m in annual revenues, he said.

As one example he pointed to the sale, announced earlier on Thursday, of the Rohm and Haas coatings business to Akzo Nobel. Dow purchased Rohm and Haas on 1 April.

“You are going to hear a lot about that [divestment path] as the year unfolds next year,” Liveris said, but he did not disclose specific details.

The second path includes potential proceeds from a resolution of Dow’s failed Kuwait joint venture.

Arbitration with Kuwait continued, “and we are looking at a range of possibilities to resolve our dispute,” he said.

As a third path, Dow was looking at “asset light” business models.

This could involve potential transactions with state-owned resources companies, as well as other regional firms.

“Conversations are very much ongoing with two potential parties, and several more have actually contacted us recently,” he said.

However, Dow was in a strong position to do such a transaction “when and if it makes sense,” Liveris said. One factor boosting Dow were low natural gas costs at its US production sites, he said.

($1 = €0.67)

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