The Dow Chemical Co. (Dow; Midland Michigan; www.dow.com) and Petroliam Nasional Berhad (Petronas) have announced that they have reached an agreement for Dow’s Union Carbide Corp. subsidiary to sell its entire shares of ownership in the Optimal Group of Companies (Optimal) to Petronas for $660 million. Petronas would fund this acquisition through internally generated funds. The transaction, subject to customary conditions and approvals, is expected to close by the end of the third quarter of 2009.
Dow and Petronas have agreed to enter into a commercial supply agreement allowing the two companies to continue serving the current customer base with products manufactured by Optimal. Dow will market Optimal’s basic and performance chemicals products to Dow’s existing customer base in Asia Pacific.
This announcement of Dow’s divestiture of Optimal follows other actions designed to increase Dow’s financial flexibility, improve its cash flow, and pay down its bridge loan. Recent actions include:
- Announced the $1.7-billon sale of Morton Salt, a transaction expected to close in the second half of 2009
- Sold the Company’s Calcium Chloride business to Occidental Petroleum for a value in excess of $210 million
- Announced a definitive agreement for the sale of interests in Total Raffinaderij Nederland N.V. (TRN) for an enterprise value expected to be approximately $725 million, also expected to close in the second half of 2009
- Issued $6 billion of new longterm debt
- Issued $2.25 billion of new equity
- Eliminated $3 billion of perpetual preferred securities from the capital structure.
As a result of these actions, the Company is ahead of all of its financial milestones, including the paydown of the bridge loan utilized to acquire Rohm and Haas.