Dow’s Morton sale shows it can still negotiate

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The blog still finds it hard to adjust to Dow Chemical’s current financial status, following the K-Dow/Rohm & Haas episode. But facts speak for themselves. Earlier this week, S&P lowered Dow’s debt rating to just above junk grade, on completion of the R&H deal.

However, news that Dow has sold R&H’s Morton Salt to Germany’s K&S, for a cash payment of $1.675bn, shows that the company hasn’t forgotten all its negotiation skills. K&S are paying 6.2 times 2008 EBITDA of $270m, a reasonable multiple. And whilst salt is less cyclical business than polymers, Morton’s 2006 EBITDA was only $138m.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. Paul is also an invited member of the World Economic Forum’s Global Agenda Council. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such as oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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