Dow divests 40% Gulf Coast stake to Macquarie for $2.4 billion

In a strategic move to concentrate on its primary chemicals business, Dow has agreed to sell a 40% stake in certain infrastructure assets along the U.S. Gulf Coast to Macquarie Asset Management. The deal, announced Monday, is valued at $2.4 billion. Dow also indicated that the total cash proceeds could rise to approximately $3 billion if Macquarie opts to increase its stake to 49% within the first six months after the deal is finalized.

As a result of the announcement, Dow's shares saw an approximate 5% increase to $44.14 during premarket trading.

The assets in question are part of Dow's broader initiative to reassess its holdings in non-product producing operations, which includes assets like power and steam production facilities and pipeline networks. This reevaluation aligns with the company's efforts to optimize its global asset portfolio.

Dow has initiated similar reviews elsewhere, as evidenced by the scrutiny of its European assets that started in October. These assets represent close to a fifth of Dow's sales in the Europe, Middle East, Africa, and India (EMEAI) region.

The newly formed entity, Diamond Infrastructure Solutions, will serve as an infrastructure provider to Dow and other industrial entities across five sites in Texas and Louisiana.

The transaction is slated for completion in the first half of 2025.

This development follows Dow's recent removal from the Dow Jones Industrial Average last month, a change prompted by challenges the company faces, including a sluggish demand recovery and stringent regulatory environments. Sherwin-Williams (NYSE:SHW ) took Dow's place in the prominent stock market index.

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Source: Investing.com