The Dow Chemical Company (Midland, Mich.; www.dow.com) today announced the successful completion of the transaction to restructure the ownership of Dow Corning. Dow is now 100 percent owner of Dow Corning’s silicones business, which had 2015 revenues of greater than $4.5 billion and is expected to generate more than $1 billion of annual EBITDA for Dow at full run-rate synergies. The transaction represents a post-synergy multiple of less than 6x EBITDA, highlighting the unique value creation to Dow shareholders from acquiring 50 percent of the silicones business while benefiting from 100 percent of the synergies.
A pioneer, and current day leader in silicones, silicon-based technology and innovation, Dow Corning was previously a 73-year 50:50 joint venture between Dow and Corning Incorporated. Dow and Corning will maintain their equal proportional equity interests in Hemlock Semiconductor Group, a polysilicon producer in which Dow Corning was the majority shareholder.
The highly synergistic transaction extends Dow’s participation in its Consumer Solutions and Infrastructure Solutions segments, providing immediate integration into Dow’s monomer and polymer value chains. It also enables Dow to provide complementary technology offerings in attractive industry segments where Dow is already a leader today, such as building and construction, consumer care, transportation, packaging, and electronics. Dow is positioned to capture a minimum of $400 million in annual cost and growth synergies from the restructured ownership.
Dow Corning will operate as a wholly owned subsidiary of Dow, and will be headquartered with Dow in Midland, Michigan.
As previously announced, Dow Vice Chairman and Chief Financial Officer Howard Ungerleider will serve as chairman of Dow Corning in addition to his current responsibilities. Dow Vice President Mauro Gregorio, who leads the Dow Corning integration team for Dow, will serve as chief executive officer of Dow Corning. Andy Tometich, a 27-year Dow Corning veteran, has been named business president of the silicones business.
Dow’s immediate focus is on seamlessly integrating Dow Corning into its existing operations and quickly capturing full growth and cost synergies. Already, leadership from both companies have worked together to define the organizational design for rapid post-close implementation. Dow expects the transaction to be accretive to operating earnings per share (EPS), cash flow from operations and free cash flow in the first full year after transaction close.