Dow completes $150MM sale of flexible packaging laminating adhesives business

Rhea-AI Summary

Dow (NYSE: DOW) has completed the sale of its flexible packaging laminating adhesives business to Arkema for $150 million. The transaction includes five manufacturing facilities across Italy, the United States, and Mexico, encompassing Solvent-Based and Solventless Laminating Adhesives and Heat Seal Coating product portfolios. The proceeds will support Dow's capital allocation priorities and growth strategies. Dow retains its water-based laminating adhesives, acrylic adhesives, and adhesive solutions businesses. This divestiture, along with the recent Circulus acquisition, demonstrates Dow's commitment to portfolio alignment with growth strategy and circularity platforms.

Positive

• Sale generates $150 million in proceeds for growth investments
• Strategic alignment with core business focus
• Retention of key adhesive businesses aligned with growth strategy

Negative

• Divestiture of revenue-generating business unit
• Reduction in manufacturing footprint with loss of five facilities

Insights

Financial Analyst

The $150 million divestiture of Dow's flexible packaging laminating adhesives business represents a strategic portfolio optimization move. While the transaction size is relatively small compared to Dow's $31 billion market cap, it's significant for three reasons:

• The sale allows Dow to streamline operations by divesting non-core assets while retaining strategic water-based adhesives business
• The proceeds strengthen the balance sheet and provide capital for growth investments, particularly in circular economy initiatives as evidenced by the recent Circulus acquisition
• The transaction includes valuable manufacturing assets across three countries, indicating a well-structured deal that should benefit operational efficiency

The market should view this positively as it demonstrates management's commitment to portfolio optimization and strategic capital allocation. However, the immediate financial impact will be minimal given the relatively small transaction size.

• Transaction enables the Company to further focus on core, high-value downstream markets
• Proceeds will be used to support Dow's capital allocation priorities, including value-creating growth investments

MIDLAND, Mich., Dec. 2, 2024 /PRNewswire/ -- Dow (NYSE: DOW) announced today the completion of its previously announced sale of the Company's flexible packaging laminating adhesives business, within Dow's Packaging & Specialty Plastics segment, for $150 million to Arkema, a specialty materials leader.

The sale, announced May 2, 2024, includes five manufacturing sites in Italy, the United States, and Mexico. The business includes Solvent-Based and Solventless Laminating Adhesives and Heat Seal Coating product portfolios.

Proceeds from the transaction will support Dow's capital allocation priorities, including accelerating our growth strategies and delivering long-term shareholder value. The completion of this sale, along with the acquisition earlier this year of Circulus, a mechanical recycler, exemplifies Dow's commitment to aligning the Company's portfolio with its growth strategy and circularity platforms.

"We are pleased to announce the successful completion of this divestiture, a strategic move that aligns with Dow's long-term vision. This transaction not only strengthens our core business but also positions us for future growth and innovation," said Karen S. Carter, president of Packaging & Specialty Plastics at Dow. "By focusing on our key strengths, we can enhance our ability to deliver value to our customers and stakeholders."

Dow retains its water-based laminating adhesives, acrylic adhesives, and adhesive solutions businesses, which remain core to its growth and sustainability strategies. 

About Dow
Dow (NYSE: DOW) is one of the world's leading materials science companies, serving customers in high-growth markets such as packaging, infrastructure, mobility and consumer applications. Our global breadth, asset integration and scale, focused innovation, leading business positions and commitment to sustainability enable us to achieve profitable growth and help deliver a sustainable future. We operate manufacturing sites in 31 countries and employ approximately 35,900 people. Dow delivered sales of approximately $45 billion in 2023. References to Dow or the Company mean Dow Inc. and its subsidiaries. Learn more about us and our ambition to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world by visiting www.dow.com.

For further information, please contact:

Sarah Young
Dow
syoung3@dow.com                                                   

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SOURCE The Dow Chemical Company

FAQ

How much did Dow (DOW) sell its flexible packaging laminating adhesives business for?

Dow sold its flexible packaging laminating adhesives business to Arkema for $150 million.

What assets were included in Dow's (DOW) adhesives business sale?

The sale included five manufacturing sites in Italy, the United States, and Mexico, along with Solvent-Based and Solventless Laminating Adhesives and Heat Seal Coating product portfolios.

Which adhesive businesses did Dow (DOW) retain after the sale?

Dow retained its water-based laminating adhesives, acrylic adhesives, and adhesive solutions businesses.

When did Dow (DOW) complete the sale of its flexible packaging adhesives business?

Dow completed the sale on December 2, 2024, following the announcement made on May 2, 2024.