Dow, Olin earn IRS nod for $5B chlor-alkali merger

Dow Chemical announced today that it has received a favorable private letter ruling from the US Internal Revenue Service (IRS) with respect to the proposed transaction involving a significant portion of Dow’s chlorine value chain and Olin Corp.

“This milestone underscores our ability to achieve tax efficiency for this landmark transaction that will enhance value for both Dow and Olin shareholders and advance Dow’s portfolio transformation,” said Andrew N. Liveris, Dow’s CEO. "We are pleased to see this strategically significant transaction moving forward on schedule."

As previously announced on March 27, Dow will separate its US Gulf Coast chlor-alkali and vinyl, global chlorinated organics and global epoxy businesses, and then merge these businesses with Olin in a Reverse Morris Trust transaction. The merger will result in Dow shareholders receiving at least a majority of the shares of Olin, with existing Olin shareholders owning the remaining shares. 

The transaction has a tax-efficient consideration of $5 billion, and a taxable equivalent value of $8 billion to Dow and Dow shareholders.

“We are progressing toward our vision of becoming a low-cost global leader in chlor-alkali and derivatives and expanding our geographic and end-use market presence through an expanded portfolio, advantaged feedstocks, and the combined capabilities of Dow and Olin people to create value for our shareholders and customers,” said Joseph D. Rupp, Olin’s CEO.

The next transaction milestone is Olin shareholder approval. The transaction is expected to close by the end of 2015, subject to the completion of customary closing conditions. All required antitrust regulatory clearances have been achieved, including the US clearance as announced on June 16, and other countries as announced by Olin on July 6.