Corning Completes Swap to Exit Dow Corning -- Update
01 Juni 2016 - 8:26PM
Dow Jones News
By Austen Hufford
Corning Inc. said it had successfully exchanged shares of
silicone company Dow Corning for cash and an interest in a
semiconductor company, ending a 73-year joint venture with Dow
Chemical Co.
Corning said it swapped its 50% stake in Dow Corning for $4.8
billion and a 40% stake in Hemlock Semiconductor Group, which makes
semiconductors for the solar-panel industry. Dow Chemical now fully
owns Dow Corning and will also keep a stake in Hemlock.
The deal comes as the solar industry faces challenges from low
energy prices, expiring tax credits and pushback from local
electric utilities.
"Our position in Hemlock allows us to capture the potential
upside from a rebound in the solar market," Corning Chief Executive
Wendell Weeks said.
Dow Chemical said the deal would result in $400 million in cost
and growth synergies and provide complementary offerings in
segments where Dow Chemical already has market share.
In its first quarter, Dow Corning posted $112 million in profit
on $1.32 billion in revenue, both down from the same quarter a year
prior. Dow Corning said it hoped to benefit from Dow Chemical's
operational expertise, scale and research and development
experience.
The deal closed after it received a positive tax ruling from the
Internal Revenue Service.
The swap was announced in December on the same day as Dow
Chemical agreed to merge with DuPont Co., creating a chemical giant
with a market value of about $130 billion. That pending deal, which
is currently undergoing regulatory review, will combine two of the
oldest companies in the U.S. into a chemical giant called
DowDuPont. The combined company is planning to split itself into
three separately-traded companies focused on agricultural products,
material sciences, and specialty products about 18 to 24 months
after the merger closes.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
June 01, 2016 14:11 ET (18:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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