DOW
Dow Chemical Co
Industrial/Transportation, Event Driven/Special Sit
04/03/2017
Presented
| Date | 03/28/2017 |
| Price | $65.00 |
| Market Cap | $71.90B |
| Ent Value | $79.29B |
| P/E Ratio | 20.76x |
| Book Value | $21.46 |
| Div Yield | 0.03% |
| Shares O/S | 1,106.20M |
| Ave Daily Vol | 6,236,569 |
| Short Int | 1.65% |
Current
| Price | $52.57 |
| Market Cap | $36.85B |
| The Dow Chemical Co. manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. It serves the industries, including appliance; automotive; agricultural; building and construction; chemical processing; electronics; furniture; house wares; oil and gas; packaging; paints, coatings and adhesives; personal care; pharmaceutical; processed foods; pulp and paper; textile and carpet; utilities; and water treatment. The company operates through five segments: Agricultural Sciences, Consumer Solutions, Infrastructure Solutions, Performance Materials & Chemicals and Performance Plastics. The Agricultural Sciences segment provides crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. The Consumer Solutions segment consist three global businesses: Consumer Care, Dow Automotive Systems and Dow Electronic Materials. The Infrastructure Solutions segment comprises of an industry-leading portfolio of businesses utilizing advanced technology to deliver products such as architectural and industrial coating applications, building insulation, adhesives, microbial protection for the oil and gas industry, and water technologies. The Performance Materials & Chemicals segment comprises of five technology-driven, customer-centric global businesses that are advantaged through integration and driven by innovative technology and solutions: Chlor-Alkali and Vinyl, Chlorinated Organics, Epoxy, Industrial Solutions and Polyurethanes. The Performance Plastics segment is a leading lastics franchise, and is a market-oriented portfolio composed of five global businesses: Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons. The company was founded by Herbert Henry Dow in 1947 and is headquartered in Midland, MI. |
Publicly traded companies mentioned herein: Dow Chemical Co (DOW), EI du Pont de Nemours & Co (DD), LyondellBasell Industries NV (LYB)
Highlights
The presenter is long shares of Dow Chemical (DOW) in the mid-$60s and sees meaningful upside for shareholders once the merger with DuPont is completed. He continues to be surprised by the discount the stock appears to be trading at relative to the future value of the company, and he is not overly concerned about feedstock prices. The European regulators conditionally cleared the deal on Monday (3/27/17), pending the sale of i) “large parts” of DuPont’s pesticides business (including global R&D), and ii) two of Dow’s acid c-polymer manufacturing facilities and a contract to buy isomers. In his opinion, some investors may be over complicating the analysis. Assuming the $3 billion cost synergy target is achievable and applying a 10x EV/ EBITDA multiple to the pro forma company results in a $100 price objective by the end of 2019.
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