Dow reviews options for farm chemical/seeds unit

Reuters — Dow Chemical said it would “review all options” for its farm chemicals and seeds unit, which has reported falling sales for nearly a year, and suggested that it might buy Corning’s stake in a silicon joint venture.

Dow is also selling its stake in a Kuwaiti JV that produces a chemical used in polyester production and planning to cut its holding in another Kuwaiti JV that makes petrochemical products.

Shares of the company, which raised its quarterly dividend, rose as much as 8.4 per cent on Thursday.

Dow embarked on a massive restructuring in 2013, shrinking its low-margin commodity chemical businesses, including its century-old chlorine unit, to focus on more lucrative specialty chemicals used in electronics and packaging.

Falling crop prices and rising fertilizer output have triggered consolidation among farm-focused companies.

“Everyone is talking to everyone,” Dow CEO Andrew Liveris said on a conference call.

Dow’s best option may be to merge its agri unit, Dow AgroSciences, with Monsanto or Dupont — or sell it altogether, SunTrust Robinson Humphrey analyst James Sheehan said.

Monsanto is looking to grow through acquisitions after its failed bid for Syngenta. Speculation of a tie-up between Dow’s agri unit and Dupont intensified this month after Dupont CEO Ellen Kullman stepped down.

In January last year, activist investor Dan Loeb had called on Dow to split its agribusiness and other specialty chemical units from its petrochemical divisions.

Restructuring JVs

To simplify its structure, Dow has been trying to cutting down on the number of its JVs.

The company is in talks “around a potential transaction involving Corning’s ownership” in Dow Corning, Liveris said, adding that the JV had become a “much more logical fit” for Dow.

Dow Corning, formed in 1943, produces silicon-based products for aerospace, automotive and electrical industries.

Dow said it raised $1.5 billion in pretax proceeds from the sale of its stake in MEGlobal, its JV with Petrochemical Industries of Kuwait, and planned to cut its holding in another Kuwaiti JV, Greater EQUATE (all figures US$).

Dow also appointed vice-chairman Jim Fitterling its chief operating officer and promoted chief financial officer Howard Ungerleider to vice-chairman.

The company’s operating profit rose 14 per cent to 82 cents per share in the third quarter, beating the average analyst estimate of 69 cents, as raw material costs fell.

Revenue fell 16 per cent to $12.04 billion, missing analysts’ expectations of $12.38 billion, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Swetha Gopinath and Sneha Banerjee in Bangalore.