Dow’s Morton sale shows it can still negotiate

Dow right.jpg

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. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. 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.

, , ,

Leave a Reply