Dow Corning had previously been equally owned by Dow Chemical and Corning Inc. It had revenue of more than $4.5 billion in 2015. The companies still maintain equal equity interests in Hemlock Semiconductor Group, a polysilicon producer in which Dow Corning was the majority shareholder.
The unit will be headquartered in Midland, Michigan and Mauro Gregorio will be CEO of the unit. He is also currently a Dow Chemical vice-president.
The company says it expects a minimum of $400 million in annual cost and growth synergies from the restructured ownership, and anticipates securing more than $1 billion in additional annual EBITDA at full run-rate synergies.
“Dow Corning’s world-leading silicone position brings a complementary new chemistry and technology to Dow,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “As an owner of Dow Corning for more than seven decades, our deep understanding of common and adjacent markets we serve will enable us to go narrower and deeper into high growth businesses where innovation is rewarded with value. By linking our two robust innovation engines, we will bring greater value to our shareholders and a wider range of differentiated, high value solutions to our customers.”
The immediate focus is on seamlessly integrating its existing operations and quickly capturing full growth and cost synergies. Already, leadership from both companies have worked together to define the organizational design for rapid post-close implementation. Dow expects the transaction to be accretive to operating earnings per share (EPS), cash flow from operations and free cash flow in the first full year after transaction close.