Dow to divest US, Canada rail assets to Watco

LONDON (ICIS)–Dow has agreed to divest its rail infrastructure at six sites in the US and Canada to logistics firm Watco, with proceeds at around $310m, the chemicals major said on Monday.

The transaction is expected to close in the fourth quarter, subject to customary closing conditions.

Once finalised, Watco will operate rail assets at Dow’s sites in Plaquemine and St. Charles, Louisiana; Freeport and Seadrift, Texas; and Ft. Saskatchewan and Prentiss Canada’s Alberta province.

Fourteen Dow employees will transition to Watco, as well as management of around 400 contractors.

The chemicals major said it would enter long-term agreements with Watco, which will provide “cost-advantaged” services to Dow’s operations at the sites.

Dow said that it would continue efforts to trim its portfolio, adding there would be “additional opportunities” to divest some infrastructure assets like those divested to Watco.

“It [the divestment announced on Monday] aligns to Dow’s strategy to continue to grow our core businesses in a capital-efficient manner,” said Jim Fitterling, Dow’s CEO.

“The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses.”

Goldman Sachs acted as financial advisor to Dow; law firms Mayer Brown and Thompson Hine acted as legal advisors.

Front page picture: Railroad tankers cars at Dow’s Freeport site
Source: Pat Sullivan/AP/Shutterstock