Seeking Alpha

Dow Chemical's spinoff plans, chlor-alkali closures lift other chemical plays

  • Investors applaud Dow Chemical's (DOW +2.9%) move to explore a spinoff or sale of its commodity chemical business - part of its original founding business from the late 19th century - which could generate up to $3B; it's part of Dow’s ongoing efforts to shift toward higher-margin products and technologies.
  • Dow already had divested itself of ~$700M YTD; CEO Andrew Liveris had said DOW was planning to dispose of up to $4B in assets over the coming 12-24 months, and the chlorine spinoff plan means an increase in that estimate.
  • The move will help the stock price and valuation over the next six to 12 months, Argus says, since Dow has tended to have a slightly lower valuation because investors want to see less of a commodity company and more of a specialized one.
  • North American chlor-alkali producers Axiall (AXLL +9.6%), Olin (OLN +7.5%) and Westlake Chemical (WLK +1.8%) are higher on Dow's plan to close 800K tons of caustic and chlorine capacity, which analysts see as a positive for merchant sellers of caustic as it offsets the new capacity from the Dow-Mitsui joint venture.
Comments (2)
  • jpmj4847
    , contributor
    Comments (495) | Send Message
    good move by DOW and a bigger boast for AXLL and other chlor-alkali producers...jpmj4847
    2 Dec 2013, 07:58 PM Reply Like
  • foxtail
    , contributor
    Comments (19) | Send Message
    Will stockholders participate in this spinoff ?
    3 Dec 2013, 06:17 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio: