About a week before press news broke on Nov. 12 that Dow Chemical was set to unload the powder coatings business it absorbed during its troubled acquisition of Rohm & Haas. Dow needs to raise cash so that it can reduce the heavy debt load it incurred. To this end, Dow, which has struggled to integrate Rohm & Haas after buying the company in a $16.3 billion deal earlier this year, has been selling off businesses.
A planned joint venture in Kuwait would have brought in proceeds to help cover the Rohm & Haas buy, but the JV fell apart last year, and Dow was left in a difficult spot. After trying to back out of the deal, a legal battle essentially forced the company to swallow Rohm & Haas. As a result, Dow became the world's leading specialty chemicals and advanced materials company, but with a difficult portfolio to manage.
Dow is selling the non-core powder coatings business to AkzoNobel, the largest paint company in the world with coatings revenues of approximately $14 billion in 2008. Dow plans to raise about $3.5 billion by divesting its non-core assets. Financial terms of the transaction were not disclosed and the transaction is expected to close by the second quarter of 2010, subject to customary closing conditions, including regulatory approvals.
For AkzoNobel, also the largest global manufacturer of powder coatings, the deal will bring upgraded technological expertise and significant synergy potential for the powder coatings business, as well as enhance the company's position in the U.S., where it continues to increase its presence after its purchase last year of Imperial Chemical Industries (ICI). This issue features an exclusive interview with Rob Molenaar, managing director of AkzoNobel Powder Coatings, regarding the transaction and the state of the global powder coatings market.