Dow Chemical Company partners with Olin Corporation to create an industry leader in chlor-alkalia and derivatives. This transaction is highly accretive to Dow, with a tax efficient consideration of $5 Billion. According to the deal, Dow is to separate a significant portion of its chlor-alkali and downstream derivatives businesses and merge these with Olin in a tax-efficient Reverse Morris Trust transaction. Dow shareholder value will increase through the ownership of shares in the combined company.
According to sources, the transaction is highly complementary to objectives of both companies, with a significant potential to enhance value for both sets of shareholders. Transaction is highly accretive to Dow and Dow shareholders, with a tax efficient consideration of $5 billion, and a taxable equivalent value of $8 billion.
The agreement terms specify that Dow separates its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses, and then merge these with Olin in a Reverse Morris Trust transaction. This results in Dow shareholders receiving approximately 50.5 percent of the shares of Olin and existing Olin shareholders owning approximately 49.5 percent. The merger is valued at $5 billion, and includes $2.0 billion of cash and cash equivalents to be paid to Dow; an estimated $2.2 billion in Olin common stock using the Olin stock value as of close on March 25, 2015. The transaction is subject to approval by Olin shareholders and completion of customary closing conditions, including relevant tax authority rulings and regulatory approvals.
“By combining Dow’s world-class assets and people with Olin, we are creating a premier company with the scope and capabilities to optimally leverage long-term growth opportunities in the marketplace and generate significant shareholder value,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “We have jointly created a solid foundation for success for Olin, driven by the benefits of greater scale, an enhanced ability to capitalize on globally advantaged cost positions backed by U.S. shale gas economics, technology advantages, broader market access and significant envelope integration.”
Liveris added, “This milestone is a powerful shift in our portfolio towards targeted, integrated high performance sectors and end-markets that will drive further margin expansion, earnings growth, and return on capital – with a deal structure designed to maximize total shareholder return. With this transaction we will exceed our target to divest $7 billion to $8.5 billion of non-strategic businesses and assets. This achievement will allow us to have an ongoing focus to continue to enhance shareholder remuneration, reduce debt and continue to invest in future growth in our high priority and high margin businesses.”
“This transaction is a natural fit to our strategic objectives – creating a sustainable, long-term growth platform and enhanced shareholder and customer value,” said Joseph D. Rupp, Olin’s chairman and chief executive officer. “Supported by significant integration and scale, premier low-cost assets, an upgraded and diversified product mix, and valuable network and other synergies, we will be able to better serve and grow with our customers. We are excited to combine the strengths of our businesses and capitalize on the significant opportunities inherent in this transaction.”
Olin Corporation will continue to be led by Rupp along with a senior management team comprised of both Dow and Olin current employees. Olin’s Board of Directors will consist of the existing nine Olin Company directors and three new members to be designated by Dow.
About Dow
Dow is a company that uses chemical, physical and biological sciences to help address many of the world’s most challenging problems. These challenges include the need for clean water, clean energy generation and conservation, and increasing agricultural productivity. In 2014, Dow had annual sales of more than $58 billion and employed approximately 53,000 people all over the world. Dow stock market evolution: http://www.marketwatch.com/investing/stock/dow
About Andrew N. Liveris
Andrew N. Liveris is President, Chairman and chief executive officer of The Dow Chemical Company. Liveris has been a member of Dow’s board of directors since February 2004, CEO since November 2004 and was elected as chairman of the board effective 1 April 2006.
About Olin Corporation
Olin Corporation has three business segments: Chlor Alkali Products, Chemical Distribution and Winchester. Chlor Alkali Products, with eight U.S. manufacturing facilities and one Canadian manufacturing facility, produces chlorine and caustic soda, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. Chemical Distribution manufactures bleach products and distributes caustic soda, bleach products, potassium hydroxide and hydrochloric acid. Winchester, with its principal manufacturing facilities in East Alton, IL and Oxford, MS, produces and distributes sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges. Olin stock market evolution: http://www.marketwatch.com/investing/stock/oln
About Joseph D. Rupp
Mr. Joseph D. Rupp, also known as Joe, has been the Chief Executive Officer at Olin Corporation since January 2002 and also as its Chairman since June 30, 2005. Mr. Rupp served as a Director at American Chemistry Council Inc. Mr. Rupp holds a Bachelor of Science in Metallurgical Engineering from the University of Missouri, Rolla.
