Dow Chemical launches $1 billion debt buyback offer

MIDLAND, Mich. - The Dow Chemical (NYSE:DOW) Company, a subsidiary of Dow Inc. (NYSE: DOW), has initiated a cash tender offer to repurchase up to $1 billion of its own debt securities, as well as those of its wholly owned subsidiaries Rohm and Haas Company and Union Carbide Corporation. The offer, announced today, aims to purchase, retire, and cancel certain outstanding debt securities listed in a detailed offer to purchase statement. According to InvestingPro data, Dow currently maintains a market capitalization of $27.51 billion and has demonstrated a pattern of aggressive share buybacks, indicating an active capital return strategy. The company’s total debt stands at $17.67 billion as of the latest reporting period.

The tender offer targets an aggregate purchase consideration of $1 billion, excluding accrued interest. Specific securities, such as TDCC’s 0.500% Notes due 2027, have an acceptance sublimit of €500 million, while the 9.400% Notes due 2039 have a sublimit of $100 million. TDCC reserves the right to adjust these sublimits or the overall tender cap at its discretion.

Investors who tender their securities by the early participation date of March 10, 2025, will be eligible to receive the total consideration, which includes an early participation premium, along with accrued interest. The offer is set to expire on March 25, 2025, unless extended, with a potential early settlement date around March 13, 2025, for those tendered by the early participation date.

The purchase prices for the securities will be determined based on fixed spreads to certain reference benchmarks, with the exact amounts calculated after the early participation date. TDCC’s obligation to complete the tender offer is contingent on securing sufficient funding through the issuance of new debt securities on satisfactory terms, known as the Financing Condition.

Citigroup (NYSE:C) Global Markets Inc. and HSBC Securities (USA) Inc. are acting as joint lead dealer managers for the tender offer, with additional support from co-dealer managers RBC Capital Markets, LLC and TD Securities (USA) LLC. The tender offer is being made only through the offer to purchase document, and not all security holders may be eligible to participate, depending on jurisdictional regulations.

This move comes as Dow, a leading materials science company with sales of around $43 billion in 2024, continues to manage its financial structure. Currently trading near its 52-week low at $39.05, the stock offers a substantial dividend yield of 7.17% and trades at what InvestingPro analysis suggests is an undervalued level. The company emphasizes that neither Dow Inc., TDCC, Rohm and Haas, Union Carbide Corporation, nor their affiliates are making any recommendation to holders regarding the tendering of securities. For deeper insights into Dow’s financial health and valuation metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 8 additional key ProTips about the company’s performance and outlook.

The information in this article is based on a press release statement from The Dow Chemical Company.

In other recent news, Dow Inc. reported its fourth-quarter 2024 financial results, which fell short of market expectations. The company announced net sales of $10.4 billion, slightly below the anticipated $10.58 billion, and an earnings per share (EPS) of $0, missing the forecasted $0.29. Despite these results, Dow’s stock remained stable, reflecting cautious investor optimism. Additionally, Dow Inc. and its subsidiary, The Dow Chemical Company, have made an administrative filing with the U.S. Securities and Exchange Commission (SEC) to streamline their Annual Report on Form 10-K for 2024. This filing includes key documents such as a description of securities and the restated Elective Deferral Plan.

Furthermore, Dow continues its long-standing tradition of shareholder returns by declaring a quarterly dividend of 70 cents per share, marking the 454th consecutive dividend since 1912. The company is also focusing on strategic cost reductions, targeting $1 billion in savings by 2026. In another development, Dow Inc. announced a transaction with Macquarie Asset Management, selling a 40% equity stake in select infrastructure assets, which is expected to generate $2.4 billion in initial cash proceeds. These recent developments highlight Dow’s ongoing efforts to navigate economic challenges while maintaining shareholder value.

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