Dow now plans to sell $4.5bn-6bn worth of assets, up from an earlier goal of $3bn-4bn.
This expansion will cover units that have a relatively small position in their respective markets, said CEO Andrew Liveris during an investor presentation. While these businesses have good earnings, Dow has a small market share. Even if Dow were to invest in these businesses, its market share would remain relatively small, the CEO said.
"Frankly, we can't grow," Liveris said.
Among these small businesses, some of them are in Dow's functional materials segment.
This segment includes the company's consumer and industrial solutions business; its microbial control business; and its pharmaceutical and food solutions business.
The other is Dow's performance materials segment. This includes 11 businesses such as amines, plastic additives, oxygenated solvents, surfactants and propylene glycol (PG), as well as chlorinated solvents and epoxy resins.
Liveris did not specify which businesses the company may sell or whether some of them would be outside of functional and performance materials.
The additional $1.5bn-2bn in asset sales was among the recommendations made by an 18-month review, Liveris said. The company may reveal more recommendations from the review later in the year.
These asset sales are on top of the chlorine business carve out that Dow had announced earlier.
Dow is carving out its chlorine, chlorinated organics and epoxy resins businesses, preparing them for a sale, a joint venture or a spin-off in what could be several deals.
The carve-out represents up to $5bn of the company's total revenue. It includes approximately 40 manufacturing facilities at 11 sites and almost 2,000 employees.
Dow would like to complete the deals in the early part of the 12- to 24-month timespan it gave when it announced the carve-out late in 2013.
Pre-marketing has started, and the initial response for the carve-out has been good, Liveris said.
Late this year, Dow expects to begin negotiating definitive agreements. The deals should close by the end of 2015, the CEO said.
Assets that are part of Dow’s carve-out include its chlor-alkali and chlor-vinyl facilities in Plaquemine, Louisiana and Freeport, Texas. This includes the company's stake in the Dow Mitsui chlor-alkali joint venture in Freeport.
It also includes Dow’s global chlorinated organics plants in Freeport and Plaquemine as well as in Stade, Germany.
The epoxy resins assets include units at Freeport and Roberta, Georgia in the US; Rheinmuenster, Baltringen and Stade in Germany; Pisticci, Italy; Gumi, South Korea; Zhangjiagang, China; and at Guaruja in Brazil.
Options to sell the group’s brine and select assets, which support operations in Freeport and Plaquemine and energy operations in Plaquemine, will also be explored.
In addition to the carve-out, Dow is shutting down about 800,000 tonnes/year of chlorine and caustic soda equivalent capacity in Freeport.
The capacity being shut down will be replaced with supply from the new plants that are coming on line with the start-up of the Dow Mitsui joint venture in early 2014.
The epoxy resins and chlorinated organics businesses had received the bulk of Dow's chlorine production. In fact, Dow's chlorine needs will fall by 70% once one considers the carve-outs and the capacity reductions that the company has announced in the last 10 years.
Nonetheless, Dow will still need chlorine for its polyurethanes and agricultural chemical businesses. These chlorine needs were among the reasons why the carve-out was so complex.
Dow will establish chlorine supply and purchase agreements similar to those it made with the 2010 sale of Styron, its styrenics business.
Dow sold Styron to Bain Capital for $1.63bn.
Styron is changing its name to Trinseo.