DuPont, Dow Chemical to combine in merger of equals

MOSCOW (MRC) -- Dow Chemical Co. and DuPont Co., two historic giants of U.S. industry, will join in an all-stock merger of equals that’s the first step in a plan to create three new highly-focused businesses., said Bloomberg.

The deal, the largest ever in the chemicals industry, will create a USD130 billion company that combines products from both Dow and DuPont in the areas of agriculture, commodities chemicals and specialty chemicals to create the new businesses. The agreement, percolating since at least February, comes after two years of pressure from activist investors who argued that shareholders of both companies would realize greater value if they were broken up.

The new company, DowDuPont, will be owned 50-50 by the current shareholders of both companies, they said Friday in a joint statement. Dow Chief Executive Officer Andrew Liveris, 61, will become executive chairman. DuPont CEO Ed Breen, 59, will be CEO of the new company.

The companies said the split would "occur as soon as feasible" and would likely happen 18-24 months after the deal closes, which is expected in the second half of 2016.

The combination will help the companies save about USD3 billion in costs in the first two years, with the possibility of saving another USD1 billion, Dow and DuPont said.

The biggest of the three new companies by revenue would be a material science company, which would cater to the packaging, transportation and infrastructure industries. The combined revenue for the materials business was about USD51 billion in 2014, on an adjusted basis.

The companies said a new specialty products company would focus on electronics. The combined adjusted revenue of that business was about USD13 billion in 2014. The third business, selling seed and crop protection chemicals, generated adjusted revenue of about USD19 billion.

DowDuPont's board is expected to have 16 members, with each company contributing eight directors, the companies said. In a separate announcement, Dow Chemical said it would buy the remaining stake in its 50-50 joint venture with Corning, the supplier of Gorilla Glass for iPhones.

The transaction is expected to yield more than USD1 billion in additional annual EBITDA at full run-rate synergies, Dow Chemical said.

As MRC informed earlier, in March, Dow said it would spin off a significant portion of its chlorine business to chemicals maker Olin Corp. And last year it said it would separate more of its commodity-based chemicals business, looking to focus on higher-end specialty concoctions, in a move to create more stable earnings. Since 2009, Dow has shed businesses responsible for USD15 billion in annual revenues and Mr. Liveris has suggested the changes are big enough that the company could even drop "chemical" from its name.

DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber. In 2014, Dow had annual sales of more than USD58 billion and employed approximately 53,000 people worldwide.

Dow to assume full ownership of Dow Corning

MOSCOW (MRC) -- Dow Chemical has announced that it will become the 100% owner of Dow Corning, which is currently a 50-50 joint venture with Corning, said Chemweek.

Dow and Corning will maintain their current equity stake in Hemlock Semiconductor Group, Dow says. "This transaction is another milestone aligned to Dow's strategic agenda to provide clarity on our joint ventures and demonstrates our ongoing and relentless focus on creating shareholder value," says Andrew Liveris, Dow's chairman and CEO.

"Today represents the transition of a very successful 72-year partnership between Dow and Corning and our strong relationship with Corning will continue through Hemlock Semiconductor. Dow is the natural owner of Dow Corning," Liveris says. "The addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow's existing, strong science and engineering competences across key chemistries," he adds.

The transaction is expected to yield more than USD1 billion in additional annual Ebitda at full run-rate synergies, and is expected to be accretive to operating earnings per share, cash flow from operations, and free cash flow in the first full year after closure of the transaction, Dow says. The company also says it is positioned to capture USD400 million in run rate annual cost and growth synergies from the restructured ownership of Dow Corning.

The transaction is expected to close in the first half of 2016, and is subject to the customary closing conditions, including relevant tax options and regulatory approvals, Dow says. Dow Corning's corporate headquarters will remain in Auburn, MI.

As MRC informed earlier, Dow Chemical Company plans to complete a debottlenecking project at its Freeport, Texas facility to increase capacity for glycidyl methacrylate (GMA) in the second quarter of 2016. The wide use of GMA, a versatile monomer for specialty coatings and resins, has placed increased demand on the product, tightening the market.

The Dow Chemical Company is an American multinational chemical corporation. As of 2007, it is the second-largest chemical manufacturer in the world by revenue (after BASF) and as of February 2009, the third-largest chemical company in the world by market capitalization (after BASF and DuPont). Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.

Chevron unveils large spending cuts in 2016

MOSCOW (MRC) -- Chevron, the US oil and gas group, has announced steep cuts in its spending on production and exploration, as it set out a plan to cut capital expenditure in 2016 by 24%, as per Financial Times.

The cuts are the latest sign of how the slump in oil and gas prices since the summer of last year is forcing companies to rein back development of new reserves, reducing the supply that will be available in future years.

John Watson, Chevron chief executive, said on CNBC television that "our number one priority" was to pay the dividend.

Other large international oil companies, including Royal Dutch Shell and BP, have been the subject of mounting concern about their ability to maintain their dividends, and Eni of Italy announced a cut in March.

However, Mr Watson told CNBC that Chevron would "get balanced financially in the short run by using spending discretion", not by cutting the dividend.

In a statement on Wednesday evening, Chevron said it planned to invest USD26.6bn in 2016, down from an expected USD35bn this year.

That includes a sharp cut in its budget for exploration for new oil and gas reserves, which will drop from USD3bn this year to just USD1bn next year.

At the same time, Chevron is cutting its spending on production in the US, including shale oil and gas, by 34%, from USD8.2bn to USD5.4bn.

In 2017-18 the company expects capital expenditure of USD20bn-USD24bn per year, meaning that it could commit just a little more than half the USD39.8bn it spent in 2014.

As MRC wrote before, in December 2014, Chevron Phillips Chemical announced plans to build a state-of-the-art polyethylene (PE) pilot plant at its research and technology facility in Bartlesville, Oklahoma.

Chevron is the second-largest US oil group by production and market capitalisation, after ExxonMobil. Chevron Phillips Chemical (part of Chevron), headquartered in The Woodlands, Texas (north of Houston), US,l is one of the world’s top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. Chevron and Phillips 66 each own 50% of Chevron Phillips Chemical.

PP imports to Ukraine dropped by 16% over the first eleven months of 2015

MOSCOW (MRC) -- The overall imports of polypropylene (PP) into Ukraine decreased by 16% over the eleven months of 2015 and totalled 85,700 tonnes. Propylene homopolymer (homopolymer PP) accounted for the greatest fall in demand, according to MRC DataScope report.

November PP imports to Ukraine remained at the level of October and totalled 9,300 tonnes. The overall imports of propylene polymers to the local market fell to 85,700 tonnes from January to November 2015 versus 102,500 tonnes a year earlier. The largest drop occurred in the supply PP-homo, the smallest decline in demand occurred in a stat-propylene copolymers (PP-random).

The supply structure by PP grades looks the following way over the stated period.

November imports of homopolymer PP to the Ukrainian market were 7,100 tonnes, virtually same as in October. Thus, imports of homopolymer PP fell over the first eleven months of 2015 by 18% year on year and totalled 65,600 tonnes. Homopolymer PP of raffia grade accounted for the main decrease in demand (-20%), whereas demand, on the contrary, increased by 11% in the injection moulding sector.

The last month's imports of propylene block copolymer (PP-impact) also remained at the level of October and were a little more than 1,000 tonnes. Imports of PP-impact to Ukraine decreased to 9,200 tonnes over the stated period from 10,500 tonnes a year earlier. The pipe grade extrusion and sheet sector accounted for the greatest fall in demand - over 21%, whereas demand in the injection moulding sector dropped by 13%.

November imports of statistical propylene copolymers into Ukraine totalled 871 tonnes versus 882 tonnes a month earlier. The overall imports of this type of copolymers of propylene totalled 8,400 tonnes from January to November 2015 versus 8,700 tonnes a year earlier. Demand for statistical propylene copolymer subsided in all consumption sectors, local producers of injection moulding products being the exception - demand grew by 5%.

The overall imports of other copolymers of propylene totalled 2,500 tonnes over the first eleven months of the year versus 3,200 tonnes a year earlier.


HDPE imports into Ukraine decreased by 12% in January - November 2015

MOSCOW (MRC) - Total imports of high density polyethylene (HDPE) into Ukraine decreased to 83,400 tonnes in the first eleven months of 2015, down 12% compared to the same period of 2014. The greatest reduction in demand occurred for the sector of extrusion blowmoulding, according to MRC DataScope.

November imports of HDPE into the country increased to 9,600 tonnes, compared with 5,600 tonnes on the back of an increase in the supply of film HDPE from Russia. Total HDPE imports fell to 83,400 tonnes from January to November 2015 from 94,500 tonnes a year earlier. The largest drop in demand occurred in polyethylene for extrusion blow molding (EBM), the segment of film HDPE, on the contrary, showed the smallest decline.

Structure of HDPE imports in the country over the reported period looked as follows.

November imports of film HDPE in the Ukrainian market increased to 4,400 tonnes against 2,800 tonnes in October, with the main increase in deliveries occurred for the Russian producers. Ukraine's film HDPE imports in January-November decreased to 40,700 tonnes in the first eleven months of the year, down 2% year on year.

November imports of injection moulding HDPE into Ukraine increased 700 tonnes compared to 400 tonnes a month earlier because of the stronger demand from local producers of caps for PET containers. Demand for injection moulding HDPE from local converters fell by 14% to 13,800 tonnes in January - November 2015.

November imports of extrusion blowmoulding HDPE into Ukraine grew to 1,900 tonnes, compared with 1,200 tonnes in October. Total imports of extrusion blow moulding HDPE into Ukraine were about 13,100 tonnes in the first eleven months of the year, down 29% year on year.

November imports of pipe HDPE into the country (including natural HDPE grades) increased to 2,000 tonnes against 1,000 tonnes a month earlier because of the reduction of deliveries from Europe and Russia. Total imports of this type of polyethylene into the Ukrainian market declined by 11% to 13,000 tonnes in January-November 2015.

HDPE imports into the other sectors of consumption in January - November 2015 were about 2,800 tonnes, compared with 4,000 tonnes year on year.