Dow AgroSciences and Health Care & Life Sciences and Life Science & Biotech

Dow Agro CEO retiring as divesture speculation returns

March 21, 2014

Indianapolis-based life sciences giant Dow AgroSciences is getting a new chief executive, the company announced Friday morning.

Meanwhile, the CEO of its parent company, Dow Chemical Co., is saying Dow Agro could potentially be sold off in a year or two as part of a strategy to streamline the corporation.

Dow Agro CEO Antonio Galindez will retire May 1 after 31 years at the company, Dow Agro announced Friday. He has been CEO and president since 2009.

Tim Hassinger, Dow Agro’s global commercial leader and global leader of the company’s Crop Protection Business Unit, will replace Galindez on May 1.

Galindez joined Dow in 1983 as a field sales representative for agricultural products in Spain and held several leadership positions before becoming CEO.

“Over the last decade, Dow AgroSciences has become one of the fastest-growing companies in the agricultural industry and has developed one of the richest innovation pipelines, with leading solutions in both crop protection and seeds, thanks in large part to Antonio’s leadership,” Dow Chemical CEO Andrew Liveris said in a prepared statement. “We thank him for his many years of service and have great confidence that Tim will build on to and accelerate business momentum going forward.”

Hassinger has worked for Dow since 1984.

Dow Agro, which has about 1,800 employees in Indianapolis, had global sales of $7.1 billion in 2013.

Liveris, on a Wednesday webcast with investors, revived speculation that the business unit could be divested. Midland, Mich.-based Dow is looking to shed some of its assets.

He resisted calls from Dan Loeb’s Third Point LLC to break Dow Chemical in two, and instead increased the company’s divestiture target by at least $1.5 billion to include smaller, slow-growing units.

The largest U.S. chemical maker plans to sell assets worth $4.5 billion to $6 billion by the end of 2015, up from an Oct. 24 target of $3 billion to $4 billion, Liveris said.

The expanded target adds “nice little jewel businesses” with combined earnings before interest, taxes, depreciation and amortization of $300 million, he said.
Loeb, an activist investor with Dow as his top holding, has said this year that Dow could add billions of dollars to earnings by spinning off commodity chemicals and plastics businesses.

Liveris said that integrating commodities with higher-value products is worth as much as $2.5 billion, and new projects and divestitures will accelerate growth.

Liveris, who is in the process of selling the chlorine derivatives business, including epoxy and vinyl, declined to name the units added to the divestiture list while saying they stand a better chance of growing with a different owner. Proceeds will be applied to the balance sheet as Dow doesn’t plan on buying “anything of size,” Liveris said.

Liveris also suggested that Dow Agro may be a divestiture candidate in a year or two.

“We’ve never said Dow AgroSciences is not a potential transactionable property,” Liveris said. “Waiting for the right moment to maximize that value and doing it in a way that actually has shareholders’ benefit is our whole drive.”

Dow Agro has been considered a divesture candidate in the past. In 2009, Liveris said the cash-pinched parent company was “very, very deep” into explorations for divesting Dow Agro, although it wasn’t his preferred path. He said his company was working with investment banks to evaluate potential buyers for 12 major assets, including Dow Agro.

At the time, analysts speculated Dow Agro might fetch $12 billion.

Instead, Dow Agro expanded in 2010 by investing more than $300 million in a research and development facility.

After Third Point announced its stake in January, Dow tripled its share buyback program to $4.5 billion and raised its dividend. About $1 billion will be repurchased by the end of March, Liveris said.

Dow’s U.S. earnings will be “slow” in the first quarter because an unusually cold winter affected sales, Liveris said. He said earnings this year will be driven by cost cuts amid “slow growth.” By next year, the ethylene industry will be entering a cyclical peak, he said.

Dow Chemical shares rose nearly 1 percent Friday morning, to $50.69 each.
 

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