Dow Lifts Asset Sale Target to $4.5-6 Billion by End of 2015
With activist shareholder hedge fund Third Point breathing down its corporate neck, Dow Chemical has lifted its asset sale target from $3-4 billion to $4.5-6 billion. The company already has announced it would sell its epoxy business and some chlorine and derivatives assets.
Dow did not specify where it plans to make the additional portfolio cuts up to 2015, although it hinted that the slow-growing electronic and functional materials and performance materials units were likely targets.
CEO Andrew Liveris said there are markets where Dow has small business with good EBITDA but "where we cannot grow."
In October 2013, CEO Andrew Liveris upped the proposed divestment sum from the $1.5-2 billion announced earlier, but Dow's management meanwhile come under increasing pressure from hedge fund titan Daniel Loeb to spin off its lucrative but slow-growing petrochemical unit and focus on specialty materials.
While Guernsey-based Third Point insists that "Dow's current petrochemical strategy seems misaligned with the changed landscape," Liveris is reluctant to split the two businesses as it produces commodities such as ethylene and propylene as ingredients for higher value-added products and also has cash cows to fund high-growth specialty chemicals businesses.