By JACK KASKEY
Dow Chemical, resisting calls from Dan Loebs Third
Point to break itself in two, increased its divestiture
target by at least $1.5 billion to include smaller, slow
The largest US chemical maker plans to sell assets worth $4.5
billion to $6 billion by the end of 2015, up from an Oct. 24
target of $3 billion to $4 billion, CEO Andrew Liveris said
Wednesday on a webcast.
The expanded target adds nice little jewel
businesses with combined earnings before interest,
taxes, depreciation and amortization of $300 million, he
Loeb, an activist investor with Dow as his top holding, has
said this year that Dow could add billions of dollars to its
earnings by spinning off commodity chemicals and plastics
businesses. Liveris said that integrating commodities with
higher-value products is worth as much as $2.5 billion, and
s and divestitures will
Liveris, who is in the process of selling the chlorine
derivatives business, including epoxy and vinyl, declined to
name the units added to the divestiture list while saying
they stand a better chance of growing with a different owner.
Proceeds will be applied to the balance sheet as Dow
doesnt plan on buying anything of size,
Liveris also suggested that Dow AgroSciences, an India
napolis-based unit that makes
pesticides and genetically modified seeds, may be a
divestiture candidate in a year or two.
Weve never said Dow AgroSciences is not a
potential transactionable property, Liveris said.
Waiting for the right moment to maximize that value and
doing it in a way that actually has shareholders
benefit is our whole drive.
Dow Chemical shares have increased 12% this year.
After Third Point announced its stake in January, Dow tripled
its share buyback program to $4.5 billion and raised its
dividend. About $1 billion will be repurchased by the end of
March, Liveris said today.
Dows US earnings will be slow in the first
quarter because an unusually cold winter affected sales,
Liveris said. He said earnings this year will be driven by
cost cuts amid slow growth. By next year, the
ethylene industry will be entering a cyclical peak, he said.
Sadara, Dows joint venture with Saudi Aramco, is 45%
constructed with 44,000 workers on site and will start its
first units in late 2015, Liveris said. A propylene
dehydrogenation unit in Texas that is 20% finished, also will
start next year, he said. US and Saudi project
s will add $3 billion to
earnings after a new ethylene unit starts in 2017, he said.
Dow will achieve an EBITDA of $10 billion in the near
term, Liveris said, repeating a forecast first made in
2010. That compares with an average $8.1 billion in EBITDA in
the past three years, he said.