Dow Chemical Co. will sell its Styron plastics business to Bain Capital Partners, a private-equities firm for an agreed upon sum of $1.63 billion in cash. The deal is part of the chemical goliaths continued effort to eliminate its debt.
Styron has 40 manufacturing plants and 1,900 employees worldwide, according to the Dow. In 2009 the company, which is to become an independent plastics and chemicals outfit within the appliances, automotive and packaging industries, reported $3.5 billion in 2009 sales.
Within the bargaining, Dow was given the opportunity to maintain a 15 percent stake in the company. The offer could benefit the Dow in the event Styron goes public in the future.
Over the last 12 month, Dow has been removing nonstrategic assets to the company and eliminating the billions in debt remaining from April’s $16.3 billion acquisition of Rohm & Haas. They will continue to reduce debt in 2010, estimating the sale of a minimum of $2 billion in assets for the year. The company’s eventual goal would be to develop a focus on higher margin products while reducing volatile dealings with the hard-hit chemical sector.
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