Summary
Dow's hand is forced regarding more divestitures to pay down ROH leverage. The only uncertainty is whether units like Ag will be sold outright or into a JV entity.
Analysis
Dow remains highly motivated to sell another $8 - $10 Billion in assets to pay down debt incurred for their takeover of ROH. While takers for the commodity plastics businesses remain elusive in the current economy, Dow's Agricultural Sciences group is a different story. Dow has historically preferred a 50/50 JV model [a la Dow Corning and the aborted 'K-Dow' deal] but may not have the luxury of choice this time. Valuations for Ag run between $6-$8 Billion as a whole, representing a major chunk of the remaining bridge debt. Dow may be hesitant to let go of the promising earnings growth stream from Ag but cutting short term cash influx by half may not be viable in a JV scenario. Unless Dow has serious offers at reasonable valuations for the commodities porfolio they may be forced to let Ag go as a whole to meet their immediate cash needs.
