Dow Chemical Divests Polypropylene Business
Dow Chemical Co. (NYSE: DOW – $41.07) said it has signed an agreement whereby its Polypropylene Licensing & Catalysts business will be sold to W. R. Grace & Co. for $500 million. Dow expects to report a gain on this divestment and net proceeds will be used to strengthen the company’s main priorities of rewarding shareholders, debt reduction and funding growth. Dow had previously announced its intent to shed this business in March, as part of its ongoing commitment to a proactive portfolio management plan to divest nearly $1.5 billion in assets by mid to late 2014. DOW, which is trading at a six-year high, has advanced over 45% over the past twelve months and sports a dividend yield of 3.12%, at current levels. Although fairly valued after this recent run up, I still believe that Dow has room to appreciate out to late decade, barring any negative global economic setbacks.