SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 1999
THE DOW CHEMICAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-3433 38-1285128
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
2030 Dow Center, Midland, Michigan 48674
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(517) 636-1000
Not applicable
(Former name or former address, if changed since last report.)
Item 5. Other Events
The Dow Chemical Company issued a press release on August 4,
1999, the text of which is as follows:
DOW CHEMICAL AND UNION CARBIDE TO MERGE
IN TRANSACTION VALUED AT $11.6 BILLION
Creates Leading Global Chemical Company With Major Growth
Opportunities
Midland, Mich. and Danbury, Conn. (August 4, 1999) - The Dow
Chemical Company (NYSE: DOW) and Union Carbide Corporation (NYSE:
UK) today announced that their boards of directors have approved
a definitive merger agreement for a tax-free, stock-for-stock
transaction. Under the agreement, Union Carbide shareholders
will receive 0.537 shares of Dow for each share of Union Carbide
they own. Based upon Dow's closing price of $124 11/16 on
August 3, 1999, the transaction is valued at $66.96 per Union
Carbide share, or $11.6 billion in aggregate including the
assumption of $2.3 billion of net debt. The transaction is
expected to be accounted for as a pooling of interests and
accretive to Dow's earnings per share in the first year after
closing.
The merger combines two of the industry's most technologically
advanced global companies, with combined annual revenues of over
$24 billion, operating income of $3 billion, a combined market
capitalization of approximately $35 billion and assets of over
$30 billion. It creates the world's 2nd largest chemical company
overall, with leadership positions in both performance and basics
businesses. The combined company will operate in 168 countries,
employ about 49,000 people and rank number 50 on the Fortune 500.
William S. Stavropoulos, president and chief executive officer of
Dow, said, "This transaction is a giant step in our strategy to
transform Dow into the world's most productive, best
`value-growth' company in the chemical industry. In phase one of
our transformation, we improved and focused our portfolio, became
the lowest-cost producer, developed a more consistent earnings
stream and achieved financial flexibility. This made us a better
company.
"In phase two, we are getting both better and bigger, including
increased productivity and higher growth in earnings per share.
This merger `jump starts' the growth phase of our strategy. It
immediately adds new performance businesses as platforms for
growth while strengthening the ones we already have. The merger
also gives us greater opportunities and higher cash generation
from our basics businesses. Together, our strengthened balanced
sheet gives us the ability to further invest in internal growth
and acquisitions.
"Through our increased scale and geographic scope, we will be
well positioned for the next peak of the cycle with a broadened
customer base across a wider range of products and applications.
Together, we are creating a global corporation with the vision,
management depth and technology leadership to reach our ambitious
financial goals, including annual EPS growth in excess of 10%
across the cycle," Stavropoulos added.
"We are companies with similar cultures and a complementary fit.
This merger will draw upon the considerable talents of the
employees of Union Carbide. A joint transition team has been
established to drive the rapid integration of the two companies,
combining the best practices and talent from each company to
create the preeminent chemical company in the
world," said Stavropoulos.
William H. Joyce, chairman and chief executive officer of Union
Carbide, said, "This is the right move at a good time. In a
consolidating chemical industry where fewer, more powerful
companies will exist, the combination of Dow and Union Carbide
now sets the gold standard for the industry. With its leading
technologies and outstanding facilities, the new Dow has even
stronger long-term prospects for profitable growth and enhancing
shareholder value."
Joyce added, "Dow and Union Carbide are companies with similar
cultures and dedication to technology, to high productivity and
to quality standards. Both have long histories of commitment to
their respective customers and employees, as well as to
Responsible Care and the communities where we operate."
Since Dow's transformation began in 1993, the company has reduced
structural costs by $2.2 billion and divested over $10 billion of
non-strategic businesses. This included DowBrands, Destec, and
Marion Merrell Dow. The company also added $10 billion in new
business assets - $5 billion in new capacity additions and $5
billion in acquisitions, the latter including Sentrachem, Buna
Sow Leuna Olefinverbund (BSL) and Mycogen. On August 2, the
company announced an agreement to purchase ANGUS Chemical
Company, a leading specialty chemicals firm.
Dow and Union Carbide have proven track records of reducing
costs. The companies expect to achieve annual cost savings of at
least $500 million by rationalizing corporate structural costs,
achieving procurement savings (including feedstocks), and
improving supply chain management. The scale and integration
achieved will significantly reduce per unit costs. Savings are
expected to begin upon closing and will be fully realized within
two years, with about half in year one. After the integration is
completed, it is anticipated that the company will have a
workforce of approximately 49,000 employees, reflecting a
reduction of about 4% of the combined workforce. Dow will seek
to minimize workforce effects of the transaction through a
combination of reduced hiring, attrition and other measures.
William Joyce, chairman and chief executive officer of Union
Carbide, will join the Dow board of directors as vice chairman.
In addition, one other member of the Union Carbide board will
join the Dow board, bringing the total number of members to 17.
Headquarters of the merged companies will be in Midland,
Michigan.
Prior to the completion of the merger, Dow will issue
approximately 3.8 million shares in order to qualify for pooling
accounting treatment. Union Carbide stockholders will own
approximately 25% of Dow after the merger. The merger is
conditioned, among other things, upon the approval of Union
Carbide stockholders, and appropriate regulatory authorities.
The companies anticipate that the transaction will be completed
early in the first quarter 2000.
Goldman, Sachs & Co. acted as financial advisor and provided a
fairness opinion to Dow. Credit Suisse First Boston acted as
financial advisor and provided a fairness opinion to Union
Carbide. Mayer, Brown & Platt is legal counsel to Dow and
Sullivan & Cromwell is legal counsel to Union Carbide.
Union Carbide is a worldwide chemicals company with advanced
process technologies and large-scale chemical production
facilities.
- - Specialties & Intermediates - Union Carbide is the leading
North American supplier of solvents and intermediates to the
paint and coatings industry; the leading licensor of several
technologies; and a leading supplier of specialty chemicals,
polymers and services used in the personal care products,
pharmaceuticals, automotive, wire and cable, oil and gas and
industrial lubricants industries.
- - Basic Chemicals & Polymers - Union Carbide is among the
largest manufacturers of polyethylene, the world's most widely
used plastic, and the technology leader in this industry; and a
large manufacturer of polypropylene, one of the world's fastest-
growing, large-volume plastics. Union Carbide is also the
world's largest producer of ethylene oxide and its derivative
ethylene glycol, used for polyester fiber, resin and film,
automotive antifreeze and other products.
The Dow Chemical Company is a global science and technology-based
company that develops and manufactures a portfolio of chemical,
plastic and agricultural products and services for customers in
168 countries around the world. With annual sales of more than
$18 billion, Dow conducts its operations through 14 global
businesses employing 39,000 people. The company has 121
manufacturing sites in 32 countries and supplies more than 3,500
products.
This press release contains statements that are not historical
facts and are forward-looking. Forward-looking statements
include among others, statement relating to anticipated product
plans, profitability, cost savings, revenue growth and strategic
plans and goals. Such statements involve risks and uncertainties
that could cause the company's results to differ materially from
what is projected, including without limitation risks and
uncertainties relating to: higher raw material costs or other
expenses, increased competitive pricing pressure or other
increases in competition. Fluctuation in demand for the company's
products, currency fluctuations and the outcome of pending or
future litigation and claims including those relating to
environmental laws and regulations. In addition, the company's
forward-looking statements could be affected by general industry
and market conditions and growth rates, general domestic and
international economic conditions. Further information can be
found in Dow's and Union Carbide's filings with the Securities
and Exchange Commission.
Contact for Dow Chemical Contact for Union Carbide
Company: Corporation:
Name: Anne M. Ainsworth Name: Sean S. Clancy
Phone: (517) 636-3920 Phone: (203) 794-6976
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE DOW CHEMICAL COMPANY
Registrant
/s/ JOHN SCRIVEN
John Scriven
Vice President,
General Counsel and
Secretary
Date: August 4, 1999
