The Dow Chemical Company is to sell two units that play a role in packaging as part of a divesture plan targeting $1.5bn in 18 months.
The Polypropylene Licensing and Catalysts business unit and its Plastics Additives business unit both play indirect roles in the production of food and beverage packaging by supplying additives and polypropylene production technology to customers.
Dow said the non-core business units had been identified for divestment as a result of “thorough, ongoing portfolio reviews in a slow-growth world”.
The actions are aimed at enhancing Dow’s position in high-margin, fast-growing end-markets, while optimizing the value of assets, said the firm.
Dow Plastics Additives (DPA) sells additives to customers who make a wide variety of films for different applications, including food packaging.
Dow estimated that these film producing customers represent 10-15% of the business – but not all of that is specifically food packaging.
A Dow spokeswoman told FoodProductionDaily.com that they believe the businesses are valuable and may have greater potential outside of the company.
“Dow is continually evaluating our portfolio of businesses and products to identify how we can garner the most value.
“To this end, we are regularly evaluating strategic options, including divestment, for businesses and/or products that no longer align with the company’s long-term strategy.”
PP L&C segment
Polypropylene Licensing & Catalysts perspective (PP L&C) licenses the UNIPOL Polypropylene Process Technology to customers for the production of polypropylene.
These customers utilize polypropylene for a variety of applications, which often serve the food and beverage industry through food and agricultural packaging.
In January, the company divested the stabilizers component of its Plastics Additives business and since 2009, has divested non-core businesses representing $8bn in revenue.
Andrew N. Liveris, Dow’s chairman and chief executive officer, said the announcement was part of their focus on return on capital.
“We are reviewing our entire portfolio and seeking even further opportunities to optimize value: selectively pruning assets that are no longer a strategic or financial fit – all in an effort to accelerate value creation and deliver long-term, sustainable growth for the company.”