02 March 2010 16:17 [Source: ICIS news]
(Adds details, updates throughout)
The headline deal price is $1.63bn but long term supply and purchase agreements will generate about $400m for Dow, a company spokesman told ICIS news. Dow also has an option to receive up to 15% of the equity of Styron as part of the deal.
Dow had hoped to raise between $1bn and $2bn from the Styron sale. At more than $2bn Bain Capital is paying 6.4 times 2009 EBITDA (earnings before interest, tax, deprecation and amortisation) for the maker of styrenics, emulsion polymers, advanced plastics, synthetic rubber and polycarbonate.
Styron is expected to generate sales of about $3.5bn, based on 2009 data, Dow said. It operates 40 plants worldwide and has about 1,900 employees.
"This transaction is yet another step in our disciplined approach to portfolio management, and is consistent with both the timeline and value we previously communicated for these assets," said Dow CEO Andrew Liveris.
Following its purchase of specialty materials maker Rohm and Haas in 2009 Dow has become more focused on higher added value products and materials.
"We are committed to further focusing our portfolio by shedding non-strategic assets that can no longer compete for growth resources inside the company, and in the process generating funds for further debt reduction and liberating resources for Dow's higher growth, higher margin portfolio of technology, market driven businesses," Liveris said in a statement.
Shares of Dow on the New York Stock Exchange traded at $28.99, up 30 cents, as of 0900 hours
Additional reporting by Stefan Baumgarten
($1 = €0.74)
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