Diversified chemicals firm The Dow Chemical Co.(DOW), on Thursday said it would divest its powder coatings business to Netherlands-based Akzo Nobel N.V (AKZOY.PK), as part of its de-leveraging plan.
Though financial terms of the deal were not disclosed, the transaction is expected to close within the second quarter of 2010. Dow said it intends to use the proceeds from the transaction to lower debt.
Midland, Michigan-based Dow said the sale is part of an ongoing process to sell non-core assets, and indicated being on track to generate more than $3.5 billion of gross proceeds from these measures.
Andrew Liveris, chairman and chief executive officer, Dow said, "The sale of this business further accelerates Dow's de-leveraging plan, and will contribute to Dow's ability to achieve its financial targets ahead of schedule."
Earlier this year, Dow purchased the powder coatings business as part of its acquisition of Rohm & Haas.
Dow had on October 22, reported higher third-quarter profit, despite lower revenues, driven by asset sales gains and cost reductions. For the third-quarter, the company's net income attributable to Dow Chemical common stockholders was $711 million or $0.63 per share, up from a year earlier. Net sales, however, declined 22% to $12.05 billion from last year, but improved on a sequential basis.
The deal comes a day after The European Commission fined a number of plastics additives producers, including Akzo Nobel EUR 173.9 million, or $260.5 million for price fixing and market sharing cartels. While reporting its third quarter results on October 27, Akzo Nobel reported a 30% year-over-year rise in profit, even as revenues dropped 10% from last year on decreased volume. The Dutch multinational has activities in more than 80 countries, and employs around 60 thousand people.
DOW closed Wednesday's trading at $26.71 on the NYSE, while AKZOY.PK closed trading at $65.60 on the Electronic OTC Markets.
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