The Dow Chemical Company has announced a US$ 5 billion deal with Olin Corp. As part of the new business agreement, the former will split its chlorine businesses and combine these with Olin Corp., which is based in Missouri. The terms of this agreement, which recently received the go-ahead from the boards of both companies, entail the merger of Dow’s entities—Global Chlorinated Organics, U.S. Gulf Coast Chlor-Alkali and Vinyl, as well as Global Epoxy—with Olin.
The deal will see Olin shell out cash to the tune of US$ 2 billion and up to US$ 2.2 billion in stock. The company will also assume other liabilities such as pension to the tune of U$ 800 million.
The two companies said in a statement recently that the new transaction will not only double the current scale of Olin’s operations, but will also lead to the creation of a new “industry leader” that will boast revenues approximating US$ 7 billion. In the meanwhile, Dow said that it will also profit from its new business deal with Olin in its plastics and other ancillary chemical operations.
Commenting on the merger, Joseph Rupp, CEO of Olin said that the two companies are looking to capitalize the many opportunities that are exist within the transaction.
In a separate deal, the two companies also said that they will be signing a separate deal as part of which Dow will be an ethylene supplier to Olin. Dow, which is headquartered in Michigan, had hinted way back in 2013 that it had plans of divesting its chlorine businesses. In lieu of the spinoff, the company would look at acquiring other assets in keeping with its future growth strategy.
Closure of this deal is expected by the end of 2015, provided Olin shareholders approve it.