Dow mulls JV, sale of epoxy, chlorine, Europe construction units

25 July 2013 16:46  [Source: ICIS news]

Dow mulls JV, sale of epoxy, chlorine, Europe construction unitsHOUSTON (ICIS)--US-based Dow Chemical is considering establishing joint ventures or even selling its epoxy resins, commodity chlorine derivatives and European building and construction businesses – as the company explores all options to turn them around, the CEO said on Thursday.

All three businesses are performing below Dow's expectations, said Andrew Liveris, CEO. He made his comments during an earnings conference call.

"Here we see the need for more dramatic interventions," Liveris said. "Therefore, these businesses are in the fix, take-action mode, which includes joint venturing or divesting them."

For epoxy resins, Liveris has discussed the challenges facing the market in previous conference calls.

Early this year, Liveris said the world had too much epoxy-resin capacity, and some companies would likely take some of that capacity off line.

Dow will say more about how it will treat epoxy resins and the other businesses in the upcoming months, Liveris said.

If Dow does pursue selling or establishing joint ventures for the businesses, the process will be complicated because of the level of the company's integration, Liveris said.

However, Dow has experience in pursuing such carve outs, he said.

Liveris pointed to the sale of the company's Styron business to Bain Capital in 2010. The deal was worth $1.63bn (€1.24bn).

The deal included several long-term supply, service and purchase agreements between Dow and Styron.

Styron included Dow’s polycarbonate (PC), acrylonitrile butadiene styrene (ABS)/styrene acrylonitrile (SAN) resins, polystyrene (PS) and styrene monomer operations, as well as the company’s stake in the Americas Styrenics joint venture with Chevron Phillips Chemical.

"Dow has the expertise and demonstrated track record to execute highly complex, integrated carve-outs successfully, with Styron a recent strong example," he said.

Nonetheless, Liveris cautioned that he was not making an announcement about the three businesses. Instead, Dow is considering whatever action is necessary to improve its return on capital.

As an example, Dow may consider both shutdowns and carve-outs for its chlorine derivatives business, Liveris said.

For chlor-alkalis, Dow has already created a joint venture, Dow-Mitsui Chlor-Alkali (DMCA), with Mitsui & Co in 2010.

The joint venture was formed to build an 800,000 tonne/year membrane-based chlor-alkali plant at Dow’s chemicals complex in Freeport, Texas.

($1 = €0.76)

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By: Al Greenwood
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