Mon, Oct. 5, 2:14 PM
- Dow Chemical (DOW +3.8%) shares are strong as the company closes the split-off transaction of its chlor-alkali and downstream derivatives business, and the merger of these businesses with Olin (NYSE:OLN) to create an industry leader with revenues approaching $7B.
- Dow says the deal is highly accretive, with a tax-efficient consideration of greater than $4.6B on an after-tax basis and taxable equivalent value in excess of $7B.
- Dow says it has exceeded its prior stated goal to divest $7B-$8.5B of non-strategic businesses and assets by mid-2016, with the total now approaching more than $12B in pre-tax proceeds.
- Dow also expects the exchange to return ~$1.5B in value to shareholders through the split-off, effectively completing $6.5B of its $9.5B share repurchase program.
Wed, Sep. 2, 10:05 AM
- UBS upgrades Olin (OLN -2.5%) to Neutral from Sell, believing OLN will be supported by its ~4% dividend yield and cost savings potential given the upcoming Reverse Morris Trust with Dow Chemical's chlorine-based business, but downgrades peer Axiall (AXLL -4.7%) to Sell from Neutral.
- Although underlying fundamentals are challenged, UBS prefers OLN over AXLL on a relative basis since OLN has a 4% yield and AXLL pays no dividend, OLN should close its Reverse Morris Trust with Dow in early October, and AXLL is still the only major vinyls provider that is not back integrated to ethylene.
Fri, Mar. 27, 3:27 PM
- In a dig at Third Point's Daniel Loeb, Dow Chemical (DOW +3.2%) CEO Andrew Liveris says his company's decisive move to shift out of the commodity chemicals business shows how “Dow continues to behave as our own best activist.”
- Dow's deal to sell its chlor-alkali business to Olin (OLN +18.2%) in exchange for $2B and a 50.5% stake in the smaller company will create the world’s largest chlorine producer with 5.7B tons/year of production and $1B in EBITDA.
- Citigroup’s P.J. Juvekar offers three reasons why the deal is good for shareholders: The chlor-alkali divestiture at 8x EBITDA is a great multiple for a commodity business, the Reverse Morris Trust deal makes it tax-free and a split-off will allow Dow to buy back its own shares efficiently - a similar move by PPG Industries was viewed very positively two years ago, and Dow will sell ethylene to OLN for 20 years and will receive an upfront payment of ~$400M.
- Dow may still get rid of its agricultural chemicals business, which does not have a lot in common with the rest of the business; with $7.3B in sales and almost $1B in EBITDA last year, the unit could be worth $10B.
- Juvekar says Axiall (AXLL +5%) also could benefit from the deal, seeing consolidation in the U.S. chlor-alkali industry as a positive, and OLN says it will look to optimize its expanded chlor-alkali asset base.
Fri, Mar. 27, 12:45 PM
Fri, Mar. 27, 9:13 AM
Fri, Mar. 27, 7:24 AM
- Dow Chemical (NYSE:DOW) says it will split off a major part of its chlorine business and merge it with Olin Corp. (NYSE:OLN) in a deal valued at $5B.
- The new entity, which will include Dow’s U.S. Gulf Coast chlor-alkali and vinyl, global chlorinated organics and epoxy businesses, is expected to have revenue of nearly $7B.
- The move comes as Dow faces criticism of its structure from the Third Point hedge fund, which has pressured Dow to break apart its petrochemicals business from its specialty chemicals segment.
- DOW +6.1%, OLN +4.8% premarket.
Mon, Mar. 23, 12:50 PM
- Olin (OLN -3.8%) is downgraded to Sell from Neutral with a $25 price target at UBS, which says the sum of the parts argument for OLN following the Vista Outdoor spin is less compelling the higher the stock moves, and the firm believes channel inventory declines have not bottomed yet.
- While OLN made positive comments about the potential for a chlorine/caustic recovery on its Q4 earnings call, the sentiment was not echoed by competitors Axiall (AXLL -1.2%) and Westlake (WLK +0.5%), and Dow Chemical (DOW +0.1%) is selling its operations partly because of depressed results.
- UBS views chlor-alkali as a shale gas advantaged business, where supply has increased in recent years, plus the natural gas advantage has declined with the fall in oil prices.
Apr. 25, 2014, 5:39 PM
Mar. 7, 2014, 5:37 PM
Jan. 27, 2014, 5:40 PM
Dec. 2, 2013, 2:24 PM
- 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.
Mar. 11, 2013, 12:42 PMShares of Olin (OLN +0.9%) move up after Monness Crespi Hardt raises its rating to Buy and put a $31 price tag on the shares. The firm says that approximately $500M has been spent by the company over the past two years to exit mercury cell production, build out bleach capacity and move its Winchester manufacturing capacity to Mississippi. Going forward, the depreciation schedule should rise, capex will drop and free cash flow is anticipated to expand rapidly. | Mar. 11, 2013, 12:42 PM | 1 Comment
Oct. 28, 2011, 1:32 PM
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