Dow Announces Multiple Actions to Accelerate Shareholder Value Creation From Dow Corning Transaction; Increases Synergy Captu...
June 28 2016 - 5:45AM
Business Wire
Company to Optimize Asset Footprint, Combine IT and R&D
Systems and Consolidate Workforce, Among Other Actions
The Dow Chemical Company (NYSE:DOW) today announced a series of
actions to achieve synergy capture and accelerate shareholder value
creation from the restructuring of its ownership of the Dow Corning
Corporation.
Dow Corning’s silicones technology and product platform brings a
highly complementary and growth-enabling new chemistry to Dow that
is aligned to the Company’s strategy to go narrower and deeper in
attractive industry segments where Dow is a leader today, such as
building and construction, consumer care, transportation, packaging
and electronics. Dow is uniquely positioned to capture
$500 million in combined run rate annual synergies as a result
of the restructured ownership – consisting of $400 million in
cost synergies, an increase from the previously stated $300 million
target, and $100 million in growth synergies – and expects to
achieve $1 billion of additional annual EBITDA at full
run-rate. The transaction will also be accretive to operating
earnings per share, cash flow from operations and free cash flow in
the first full year after transaction close.
“We are moving quickly and effectively to integrate Dow Corning
and deliver the synergies that will drive new levels of value
creation for our customers and generate even greater returns for
our shareholders,” said Andrew N. Liveris, Dow’s chairman and chief
executive officer. “With these difficult but necessary actions, we
are bringing together the best of each company’s talent and
technology, accelerating Dow’s strategy to go narrower and deeper
into attractive, targeted market sectors, and setting the stage for
the new Dow – the world’s leading material science company.”
Cost synergies will be achieved through a combination of
workforce consolidations and savings from actions such as
harmonizing energy contracts at large sites, optimizing warehouse
and logistics footprints, implementing materials and maintenance
best practices, combining information technology service structures
and leveraging existing research and development (R&D)
knowledge management systems.
Dow will shut down silicones manufacturing facilities in
Greensboro, North Carolina, and Yamakita, Japan, as well as certain
administrative, corporate and manufacturing facilities to further
enhance competitiveness and streamline costs associated with the
transaction.
These collective actions will result in a reduction of
approximately 2,500 positions globally, or approximately four
percent of Dow’s workforce.
The Company will take a charge of approximately
$410 million to $460 million in the second quarter of
2016 for asset impairments, severance and other costs related to
these measures, which are expected to be completed in the next two
years.
These actions position Dow to achieve its cost synergy target
run rate of 70 percent within 12 months of closing the Dow
Corning transaction, and 100 percent within 24 months. In addition,
the Company continues to progress efforts to capture significant
growth opportunities driven by broader product offerings in key
business areas, cross-selling opportunities and expanded R&D
capabilities to commercialize innovations faster.
Dow will involve local stakeholders as defined in each country
and in compliance with relevant information and consultation
processes.
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 material,
polymer, chemical and biological science 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 2015,
Dow had annual sales of nearly $49 billion and employed
approximately 49,500 people worldwide. The Company's more than
6,000 product families are manufactured at 179 sites in 35
countries across the globe. On June 1, 2016, Dow became the
100 percent owner of Dow Corning Corporation’s silicones
business, a global company with sales of greater than
$4.5 billion in 2015, 25 manufacturing sites in 9 countries
and approximately 10,000 employees worldwide. 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.
Note: The forward looking statements contained in this document
involve risks and uncertainties that may affect Dow’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 Dow’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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160628005713/en/
The Dow Chemical CompanyRachell Schikorra,
+1-989-638-4090ryschikorra@dow.com
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