- A fund managed by Macquarie Asset Management to acquire an initial 40% stake in select Dow U.S. Gulf Coast infrastructure assets with an option to increase its equity stake to 49% within six months of closing
- Dow is expected to receive initial cash proceeds of approximately $2.4 billion based on the initial transaction, with potential to receive up to approximately $3.0 billion in total
- Diamond Infrastructure Solutions will leverage Dow's operational excellence and Macquarie Asset Management's world-leading infrastructure expertise to generate growth opportunities by opening access to Dow's U.S. Gulf Coast sites to third party customers
- Proceeds to be deployed towards higher value-creating growth investments
Dow (NYSE: DOW) announced that it has entered into a definitive agreement to sell a 40% equity stake in select U.S. Gulf Coast infrastructure assets to a fund managed by Macquarie Asset Management, a leading global infrastructure and energy asset manager.
This new partnership, Diamond Infrastructure Solutions ("Diamond"), will be a specialist infrastructure provider to Dow and other industrial customers at its five locations in Texas and Louisiana, offering comprehensive services to its tenants with a focus on world class efficiency, reliability and safety. As a dedicated infrastructure company, Diamond will be a new business model with greater strategic focus on operational efficiencies and new customer acquisition. Profitable growth for Diamond will benefit both Dow and Macquarie Asset Management's future bottom-line results.
Dow expects to receive initial cash proceeds of approximately $2.4 billion based on the sale of its 40% minority equity stake with the potential to generate cash proceeds up to approximately $3.0 billion for a 49% minority equity stake. Macquarie Asset Management will have the option to increase its equity share to 49% within six months of closing. Dow and Macquarie Asset Management expect to close the transaction in the first half of 2025, subject to customary regulatory approvals and other closing conditions.
"Today's announcement demonstrates Dow's ongoing commitment to value maximizing actions across our portfolio," said Jim Fitterling, chair and chief executive officer of Dow. "This transaction further strengthens our financial flexibility and enables continued cash deployment towards the most attractive opportunities that will create long-term value for our stakeholders. We are confident that Macquarie is the right industrially minded partner due to our shared values to ensure the ongoing safe and reliable operations of these assets to support Dow and industrial customers across the U.S. Gulf Coast."
Diamond is comprised of certain non-product producing assets (power and steam production, pipelines, environmental operations and general site infrastructure) located at five of Dow's manufacturing sites in the U.S. Gulf Coast (USGC): Freeport, Texas City, and Seadrift in Texas, as well as Plaquemine and St. Charles in Louisiana. Pipeline and storage assets span across the USGC with connections to major natural gas, NGL and olefin hubs. Dow will maintain control as the majority owner of Diamond to help ensure the continuity of safe and reliable operations.
Macquarie Asset Management is a leading global infrastructure asset manager with a focus on operational excellence. It prioritizes investments in high quality, essential assets that can be improved over time and deliver growth and reliable service to customers, as well as the health and safety of employees. Macquarie Asset Management has specific experience in managing and operating industrial parks, regulated utilities and other industry-oriented infrastructure platforms.
"As a long-term owner of essential infrastructure, we recognize the value that can be unlocked through the development of infrastructure platforms like Diamond Infrastructure Solutions," said Ben Way, Global Head of Macquarie Asset Management. "We believe that our significant infrastructure experience and capabilities, coupled with Dow's operational excellence, will deliver additional efficiencies and long-term growth."
This transaction is another step in Dow's continued actions to evaluate its ownership of non-product producing assets across its global portfolio. It builds on the previous sale of the Company's rail infrastructure assets at six North American sites in September, 2020, and the sale of its U.S. Gulf Coast marine and terminal operations and assets in December, 2020.
Citi and Goldman Sachs acted as financial advisor to Dow, and Linklaters provided legal support.
