Dow Chemical Co. will separate a significant chunk of its chlorine business and sell it to Clayton-based Olin Corp. in a transaction valued at $5 billion, Dow announced Friday in a news release.
Terms of the deal call for Dow to separate its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses, and merge them with Olin in a tax-friendly “reverse trust” transaction.
The $5 billion price tag includes $2 billion of cash and cash equivalents to be paid to Dow; an estimated $2.2 billion in Olin common stock; and approximately $800 million in pension and other liabilities.
Shareholders of Midland, Mich.-based Dow will receive approximately 50.5 percent of the shares of Olin, and existing Olin shareholders will own approximately 49.5 percent, according to the release.
The companies expect the new entity to generate annual revenue of close to $7 billion.