MIDLAND, Mich.—Dow Chemical Co. has completed its transaction to become the full owner of Dow Corning's silicones business.
Dow and its joint venture partner Corning Inc. came to an agreement in December 2015 where Dow paid $4.8 billion in cash to acquire Corning's stake in the joint venture. Dow said that the two firms will maintain their equity stake in Hemlock Semiconductor Group, a polysilicon manufacturer comprised of several joint venture companies currently owned in majority by Dow Corning.
“Dow Corning's world-leading silicone position brings a complementary new chemistry and technology to Dow, with it being a hand-in-glove, strategic fit for our material sciences portfolio,” Andrew N. Liveris, Dow chairman and CEO, said in a June 1 news release.
Dow said it targets a minimum of $400 million in run rate annual cost and growth synergies from the restructured ownership of Dow Corning. The firm also expects the transaction to yield more than $1 billion in additional annual EBITDA at full run-rate synergies.
Dow Corning will operate as a wholly own subsidiary of Dow with both firms being headquartered in Midland. Dow previously said that Howard Ungerleider—Dow's vice chairman and chief financial officer—will serve as chairman of Dow Corning in addition to his current responsibilities.
The firm also appointed Dow Vice President Mauro Gregorio, who led the Dow Corning integration team, as the new CEO of Dow Corning. Andy Tometich, a 27-year veteran of Dow, was appointed business president of Dow Corning's silicones business.
Dow said in an earlier May release that Bob Hansen, who previously served as Dow Corning chairman and CEO, retired after the transaction closed.
“We are excited to welcome the Dow Corning team to the Dow family, and to deliver the tremendous growth potential of the combined company,” Ungerleider said in a statement. “Dow Corning is a new element for growth for Dow. Bringing together these two industry-leading companies will drive exciting opportunities for our customers worldwide via more comprehensive product offerings, access to new technologies, and expanded research and development power to help quickly commercialize innovations.”
Dow said its immediate focus is on integrating Dow Corning into its existing operations to quickly capture the full growth and cost synergies from the transaction. Leadership from both companies have worked together to define the organizational design for rapid post-close implementation. It expects the transaction to be accretive to operating earnings per share, cash flow from operations and free cash flow in the first full year after close.
“Dow Corning's silicones technology platform is a natural fit within Dow. Together we share 73 years as joint venture partners,” Gregorio said in a statement. “And we also share a promising future of bringing new technologies and innovation to customers worldwide.”