Dow Makes Waves In Chemical Mergers And Acquisitions World

The Dow Chemical Company has been making waves in the chemical M and A world recently with a series of joint ventures with several other chemical companies around the world. Last week, America's largest chemicals manufacturer entered into a joint venture with Ube Industries Ltd., a century-old Japanese chemical company whose products are used in everything from consumer electronics to pharmaceuticals. Under the auspices of a global chemical mergers and acquisitions firm, the two companies formed a new company called Advanced Electrolyte Technologies LLC., which will manufacture electrolytes for lithium-ion batteries to capitalize on the growing demand from hybrid and electric vehicles, as well as other applications.

This joint venture is significant for Dow because it marks the first opportunity for the Midland, Michigan-based chemical giant to give its Energy Materials business access to formulated electrolytes, which are essential components in the development of lithium-ion battery cells. Dow sees this as an opportunity to expand its alternative energy offerings while cashing in on the clearly growing market of hybrid vehicles. This move complements Dow's current Energy Materials growth strategy of building an integrated product portfolio (now to include formulated electrolytes) to address the rapidly expanding industry of energy storage.

The new Advanced Electrolyte Technologies LLC. company will supply to virtually every advanced-battery-cell manufacturer in the market. Dow and Ube will have equal stake in the joint venture, which is expected to be finalized later this year pending regulatory approval. The combination of Ube's expertise in electrolyte technology with Dow's material science strength and global footprint is expected to yield significant growth opportunities for both companies. Advanced Electrolyte Technologies' first manufacturing facility is in the planning stages, and will be built in time for startup next year in Dow's hometown of Midland. The facility will manufacture a variety of material technology products to meet the growing demand for high-performance batteries.

For Dow, this joint venture is the latest in a series of chemical M and A projects. Last month, Dow entered into a similar joint venture with a Turkish manufacturer of synthetic acrylic fibers. Together with Aksa Akrilik Kimya Sanayii (AKSA) AS, Dow will be producing carbon fiber and a wide range of carbon fiber-based composite materials. Dow recently reported its 2011 first quarter results, which were overwhelmingly positive. Quarterly revenues were above the Zacks Consensus Estimate of $13.8 billion, jumping 20% year over year to $14.7 billion. The company earned $0.82 per share in Q1, reporting volume and pricing gains across all business segments, particularly in North America and Europe.