- Transaction is highly accretive to Dow
and Dow shareholders, with a tax-efficient consideration of greater
than $4.6 billion or taxable equivalent value in excess of $7
billion to Dow and Dow shareholders.
- Dow reduces outstanding shares of its
common stock by more than 34 million shares; returns $1.5 billion
in value to shareholders through the split-off, effectively
completing $6.5 billion of its $9.5 billion share repurchase
program.
- Dow exceeds divestiture target –
reaching $12 billion and further advancing the Company’s portfolio
shift to select high-performance sectors.
The Dow Chemical Company (NYSE: DOW) ("Dow") today announced the
successful closing of the previously announced split-off
transaction, resulting in the separation of a significant part of
Dow’s chlor-alkali and downstream derivatives businesses and merger
of these businesses with Olin Corporation (NYSE: OLN) ("Olin") to
create an industry leader with revenues approaching $7 billion.
Included are Dow’s U.S. Gulf Coast Chlor-Alkali and Vinyl,
Global Chlorinated Organics, and Global Epoxy business units, in
addition to 100 percent interest in the Dow Mitsui Chlor-Alkali
joint venture. The closing of the merger followed the expiration of
the related exchange offer and the satisfaction of certain other
conditions. As a result of the exchange offer, Dow will reduce
outstanding shares of its common stock by more than 34 million
shares or nearly 3 percent of outstanding common shares.
The transaction is highly accretive to Dow and Dow shareholders,
with a tax-efficient consideration of greater than $4.6 billion on
an after-tax basis and taxable equivalent value in excess of $7
billion.
With this transaction, Dow exceeds its prior stated goal to
divest $7 billion to $8.5 billion of non-strategic businesses and
assets by mid-2016, with the total now approaching more than $12
billion in pre-tax proceeds.
“This transaction not only achieves a milestone in exceeding our
divestiture targets, it also marks a strategic step forward in
Dow’s targeted portfolio actions to drive further margin expansion
and increasing return on capital,” said Andrew N. Liveris, Dow’s
chairman and chief executive officer. “This transaction has a deal
structure designed to maximize total shareholder return and allows
Dow to significantly reduce its share count and enhance its balance
sheet. Dow remains firmly focused on cash flow, earnings growth and
shareholder remuneration with large accretive divestments such as
this deal and our soon-to-be-commissioned investments in Saudi
Arabia and on the U.S. Gulf Coast being strong examples of this
focus.”
The transaction has a tax-efficient consideration value of $4.6
billion, or taxable equivalent value in excess of $7 billion
including $2.1 billion of a combination of cash and debt
retirement, nearly $1.0 billion of assumed debt and pension and
other liabilities assumed by Olin, in addition to an estimated
$1.5 billion in Olin common stock (using the Olin stock value
as of close on October 2, 2015) distributed to Dow stockholders in
the exchange offer.
The split-off structure of the transaction allows Dow to return
$1.5 billion in value to shareholders and increase earnings per
share by using Splitco common stock in the exchange offer instead
of cash. With $2 billion in share repurchases to date in 2015 and
the closing of this split-off transaction, Dow has effectively
completed $6.5 billion of previously committed shareholder-focused
actions. In November 2014, Dow announced a new $5 billion tranche
to its existing $4.5 billion share repurchase program, bringing the
total program to $9.5 billion.
Preliminary Results of Exchange Offer
Dow shareholders had an opportunity to exchange their shares of
Dow common stock for shares of common stock of Blue Cube Spinco
Inc. (“Splitco common stock”), which automatically converted into
the right to receive 0.87482759 shares of Olin common stock at the
close of the transaction. The final exchange ratio was set at
2.9318 shares of Splitco common stock for each share of Dow common
stock. As a result, Dow shareholders who tendered their shares of
Dow common stock in the exchange offer received approximately
2.5648 shares of Olin common stock (subject to receipt of cash in
lieu of fractional shares) for each share of Dow common stock
exchanged and accepted by Dow.
Pursuant to the exchange offer, which expired on October 5, 2015
at 8:00 a.m., New York City time, Dow accepted 34,108,738 shares of
Dow common stock in exchange for 100,000,000 shares of Splitco
common stock owned by Dow.
Because more than 34,108,738 shares of Dow common stock were
validly tendered and not properly withdrawn in the exchange offer,
the exchange offer was oversubscribed and all shares of Splitco
common stock owned by Dow were distributed in the exchange offer.
As a result of the oversubscription, it was not necessary to
distribute shares of Splitco common stock as a pro rata dividend.
Because the exchange offer was oversubscribed, Dow announced a
preliminary proration factor of 20.33 percent.
Ongoing Dow and Olin Relationship
Two individuals with historic ties to Dow―William H. Weideman,
former Chief Financial Officer and Executive Vice President of Dow
and Carol A. Williams, former Dow Executive Vice President of
Manufacturing and Engineering, Supply Chain and Environmental,
Health & Safety Operations― have been designated by Dow to
serve along with the nine current directors on Olin’s Board in line
with the transaction agreement between Dow and Olin announced on
March 27, 2015. A third Dow designee will be announced at a later
date. Olin will be led by a senior management team comprised of
current Olin executives and former Dow leaders that transferred as
part of the transaction.
Dow and Olin will have a strong, ongoing operational and
commercial relationship, including several long-term, arms-length
supply, service and purchase agreements, which will support
downstream products aligned with Dow’s strategic market focus. Dow
will be an important anchor customer of Olin as Olin grows the
acquired business, which will enable Dow to continue to benefit
from its integration efficiencies in chlorine for key downstream
applications.
This transaction also includes a 20-year long-term capacity
rights agreement for the supply of ethylene by Dow to Olin, in
which Dow will receive up-front payments of up to $1.2 billion and,
in return, Olin will receive ethylene at co-investor, integrated
producer economics.
Transaction Scope and Dow Impact
The separation transaction scope includes approximately 50
manufacturing facilities in 12 locations in all geographic regions
and nearly 2,300 employees, which transitioned to Olin at
transaction close:
- U.S. Gulf Coast Chlor-Alkali and
Chlor-Vinyl facilities in Plaquemine, Louisiana and Freeport,
Texas, including 100 percent ownership interest in the Dow Mitsui
Chlor-Alkali (DMCA) joint venture in Freeport, Texas, and
Russellville, Arkansas;
- Global Chlorinated Organics
production facilities in Freeport, Texas; Plaquemine, Louisiana;
and Stade, Germany;
- The global Epoxy business,
including assets in Freeport, Texas; Roberta, Georgia;
Rheinmuenster, Germany; Pisticci, Italy; Baltringen, Germany;
Stade, Germany; Terneuzen, The Netherlands; Gumi, South Korea;
Zhangjiagang, China; and Guaruja, Brazil;
- Brine and select assets supporting
operations in Freeport, Texas and Plaquemine, Louisiana; and
energy operations in Freeport, Texas.
Dow retains its chlor-alkali and vinyl assets in Europe and
Latin America for back-integration purposes.
Since 2013, Dow has completed transactions totaling $12 billion,
including the sale of its Polypropylene Licensing & Catalysts
business, ANGUS Chemical Company, AgroFresh business, and Sodium
Borohydride business. This transaction is the latest in a series of
actions that will further accelerate Dow’s value growth and
productivity targets as the Company continues to shift its
portfolio toward targeted, integrated high-value markets.
Please see Olin’s press release of October 5, 2015 for
additional perspective on the transaction.
About Dow
Dow (NYSE: DOW) combines the power of science and technology to
passionately innovate what is essential to human progress. The
Company is driving innovations that extract value from the
intersection of chemical, physical and biological sciences to help
address many of the world's most challenging problems such as the
need for clean water, clean energy generation and conservation, and
increasing agricultural productivity. Dow's integrated,
market-driven, industry-leading portfolio of specialty chemical,
advanced materials, agrosciences and plastics businesses delivers a
broad range of technology-based products and solutions to customers
in approximately 180 countries and in high-growth sectors such as
packaging, electronics, water, coatings and agriculture. In 2014,
Dow had annual sales of more than $58 billion and employed
approximately 53,000 people worldwide. The Company's more than
6,000 product families are manufactured at 201 sites in 35
countries across the globe. References to "Dow" or the "Company"
mean The Dow Chemical Company and its consolidated subsidiaries
unless otherwise expressly noted. More information about Dow can be
found at www.dow.com.
Forward-Looking Statements
Note: The forward looking statements contained in this document
involve risks and uncertainties that may affect TDCC’s operations,
markets, products, services, prices and other factors as discussed
in filings with the Securities and Exchange Commission (“SEC”).
These risks and uncertainties include, but are not limited to,
economic, competitive, legal, governmental and technological
factors. Accordingly, there is no assurance that TDCC’s
expectations will be realized. The Company assumes no obligation to
provide revisions to any forward looking statements should
circumstances change, except as otherwise required by securities
and other applicable laws. This document also contains statements
about TDCC’s agreement to separate a substantial portion of its
chlor-alkali and downstream derivatives business, distribute the
business to TDCC shareholders and then merge it with a subsidiary
of Olin Corporation (the “Transaction”). Many factors could cause
actual results to differ materially from these forward-looking
statements with respect to the Transaction, including risks
relating to the completion of the transaction on anticipated terms
and timing, including anticipated tax treatment, unforeseen
liabilities, future capital expenditures, revenues, expenses,
earnings, synergies, economic performance, indebtedness, financial
condition, losses, future prospects, business and management
strategies for the management, expansion and growth of the new
combined company’s operations, Olin’s ability to integrate the
business successfully and to achieve anticipated synergies, and the
risk that disruptions from the Transaction will harm TDCC’s or
Olin’s business. While the list of factors presented here is
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward looking statements. Consequences of
material differences in results as compared with those anticipated
in the forward-looking statements could include, among other
things, business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which
could have a material adverse effect on TDCC’s or Olin’s
consolidated financial condition, results of operations or
liquidity. TDCC does not assume any obligation to provide revisions
to any forward looking statements should circumstances change,
except as otherwise required by securities and other applicable
laws.
Important Notices and Additional Information
In connection with the proposed Transaction, Splitco has filed,
and the SEC declared effective September 2, 2015, a registration
statement on Form S-4/S-1 containing a prospectus and Olin has
filed, and the SEC declared effective September 2, 2015, a
registration statement on Form S-4 containing a prospectus with the
SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
REGISTRATION STATEMENTS/PROSPECTUSES AND ANY FURTHER AMENDMENTS
WHEN THEY BECOME AVAILABLE AS WELL AS ANY OTHER RELEVANT DOCUMENTS,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PARTIES AND
THE PROPOSED TRANSACTION. Investors and security holders may obtain
a free copy of the prospectuses and other documents filed by TDCC,
Splitco and Olin with the SEC at the SEC's web site at
http://www.sec.gov. Free copies of these documents and each of the
companies’ other filings with the SEC may also be obtained from the
respective companies by directing a written request to Olin at 190
Carondelet Plaza, Clayton, MO 63105. Attention: Investor Relations
or TDCC or Splitco at The Dow Chemical Company, 2030 Dow Center,
Midland, Michigan 48674, Attention: Investor Relations.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
®TM Trademark of The Dow Chemical Company (“Dow”) or an
affiliated company of Dow
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version on businesswire.com: http://www.businesswire.com/news/home/20151005006437/en/
For further information contact:The Dow Chemical CompanyEmily
Parenteau, +1.989.636.7904ebparenteau@Dow.com
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