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In a statement, Chairman and Chief Executive Officer, Andrew Liveris said, "These actions are also aligned with our strategic transformation, which focuses on preferentially investing for growth in our performance and advanced materials portfolios. In addition, we are making excellent progress on achieving $1.3 billion in cost synergies from the acquisition, and today's steps demonstrate our speed and determination to deliver these savings."
Midland, Michigan-based Dow noted that it remains on track to achieve $1.3 billion in annual cost savings related to Rohm and Haas acquisition. The company is grappling to achieve the synergies related to its $15.4 billion acquisition of Rohm & Haas in April 2009. Dow considers Rohm and Haas a key element in its new Advanced Materials division, which includes Coatings, Building and Construction, Specialty Materials, Adhesives and Functional Polymers, and Electronic Materials.
In July 2008, Dow Chemical agreed to buyout Rohm and Haas for $15.4 billion or $78 a share at a 74% premium with the hope of broadening its product offerings. The deal was completed on April 1, 2009. The ongoing financial turmoil raised queries about the true value of the deal. Dow also said at that time that it has put into place an aggressive plan, which includes divesting its business units, to realize combined synergies of $1.3 billion, up from $910 million, as originally outlined. The company expects that the asset divestment program will yield about $4 billion.
As part of the current restructuring, the company would close three Louisiana plants that produce ethylene and related products. Chemical plants affected are an ethylene cracker in Hahnville, ethylene oxide/ethylene glycol plant also in Hahnville, and an ethylene dichloride and vinyl chloride monomer facility in Plaquemine. This is in addition to the shutdowns announced as part of a restructuring program revealed in the fourth quarter of 2008 of four production units, located in Louisiana and Texas, which use ethylene and related products.
Dow's total production unit shutdowns would result in the reduction of the Company's ethylene demand by about 30% on the U.S. Gulf Coast. The company could now eliminate its purchases of ethylene from the merchant market, thus improving the Company's cost position.
The restructuring plan also included a charge for the elimination of about 2,500 positions, which had been previously announced. The divestiture of certain acrylic monomer and specialty latex assets would also lead to recognizing an impairment charge. This divestiture was required by the U.S. Federal Trade Commission for the approval of the Rohm and Haas acquisition.
DOW is currently trading at $......, up $.... or 0......% on a volume of ….. million shares. In the past 52-week period, the stock has been trading in a broad range of $5.89 to $39.99.
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