Dow announced a series of actions to achieve synergy capture and accelerate shareholder value creation from the restructuring of its ownership of the Dow Corning Corporation.
As a result of the restructured ownership, the company wants to capture $500 million in combined run rate annual synergies. These consist of $400 million in cost synergies – an increase from the previously stated $300 million target – and $100 million in growth synergies. Dow expects to achieve $1 billion of additional annual EBITDA at full run-rate.
Cost synergies will be achieved through a combination of workforce consolidations and savings from actions such as harmonizing energy contracts, optimizing warehouse and logistics footprints, implementing materials and maintenance best practices, combining information technology service structures, and leveraging existing research and development (R&D) knowledge management systems.
Dow will shut down silicones manufacturing facilities in Greensboro, North Carolina, and in Yamakita, Japan, as well as certain administrative, corporate and manufacturing facilities. These collective actions will result in a reduction of approximately 2,500 positions globally, or approximately 4 % of Dow’s workforce.
The Company will take a charge of approximately $410 million to $460 million in the second quarter of 2016 for asset impairments, employee severance and other costs related to the restructuring, which is expected to be completed in the next two years.
- Dow Chemical Company, Midland, MI, USA
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ChemistryViews.org 2 June 2016.
Beginning June 1, the Dow Chemical Company is now 100 % owner of Dow Corning’s silicones business