Dow Chemical said on Monday that it would shed about $5 billion worth of assets, making it the latest large industrial group to try and streamline itself.
The company, based in Midland, Mich., has not determined whether it will spin or sell the assets, which include chlorine production facilities, epoxy businesses,and brine operations. But Dow said it had hired advisers to begin the disposal process.
In October, Dow’s chief executive, Andrew N. Liveris said the company was planning $3 billion to $4 billion in disposals. At the time, analysts said that they expected that number could grow, and it did.
“Today’s announcement represents a continuation of the shift of our company toward downstream high-margin products and technologies that customers value, and generate consistently higher returns than cyclical commodity products,†Mr. Liveris said. “We are committed to prioritize our resources such that we maximize total shareholder return.â€
In the past year, Dow took the first steps toward creating a simpler company with fewer business units. It recently sold its global polypropylene licensing and catalysts business, part of about $700 million worth of divestitures over the past 12 months.
But the sale of chlorine, epoxy and brine businesses mark the company’s most substantial moves to shed assets to date.
Dow shares are up 21 percent this year, buoyed by the broader market rally, giving it a market capitalization of $47.4 billion.
But Dow has been outperformed by its rival DuPont, another large industrial conglomerate that is also working to streamline itself.
DuPont, under pressure from activist investor Nelson Peltz, has seen its stock rise 36 percent this year. After selling its performance coatings business for $4.9 billion last year, DuPont in October said it would spin off its performance chemicals unit into a new publicly traded company.
Though no activist has targeted Dow publicly, analysts have speculated that the company would be vulnerable to pressure should
Even after the business units are sold, Dow expects to continue doing business with the buyers or newly public companies.
“We anticipate that any related transaction or transactions will include supply and purchase agreements between these units and the company to support downstream products aligned with Dow’s strategic market focus†said Jim Fitterling, executive vice president at Dow, who will oversee the disposals.
The company says it expects the disposals to be completed within two years, and that the sales could happen in one fell swoop or in parts.
