When The Dow Chemical Co. (NYSE:DOW) managed to finagle the $16.3 billion acquisition of specialty chemicals manufacturer Rohm and Haas Co. in April by securing a $9.2 billion bridge loan, Warren Buffett, who last summer committed to buying $3 billion worth of Dow’s preferred shares, said that the investment looked smart at the time but “looks dumb at the present time.”

Still, analysts, on average, expect Dow to announce for the fiscal quarter ending Sept. 30 earnings per share of 9 cents and revenue of $11.87 billion. Earnings expectations for the company are up from last quarter, when analysts predicted a loss, though Dow managed to eke out earnings of 5 cents per share anyway.

For a company whose long-term goal is to reduce leverage, the acquisition of Rohm and Haas wasn’t exactly the most prudent. But Dow has also been refocusing on specialty chemicals that are used in cosmetics and food additives and utilizing joint ventures to meet basic chemical needs. Indeed, Citigroup Inc. (NYSE:C) wrote in its 3Q Chemicals Earnings Preview: “The acquisition will favorably shift Dow’s portfolio toward higher margin specialty business.” 

Boosting Dow’s bottom line has been the divestitures of a bevy of businesses, the proceeds of which Dow is using to pay down the bridge loan. Specifically, in the months since Rohm closed it has also issued $6 billion in new long-term debt, $2.25 billion in new shares and sold other assets including stakes in refining joint ventures to raise cash.

The largest of those divestitures has been the sale of Morton Salt to K+S AG for $1.7 billion, making the latter the world’s largest saltmaker. Here are some others, according to the Deal Pipeline:
On Sept. 10, the company said it would sell its hollow sphere plastic pigments product line to Fairlawn, Ohio, chemicals and polymers maker Omnova Solutions Inc. Terms were not disclosed.
The company agreed on Aug. 3, to sell a Clear Lake, Texas, plant and a North American latex businesses to French chemicals maker Arkema SA for $50 million. The Texas plant is used for acrylic acid and esters production. The company also plans to close two production units in Texas as part of its restructuring initiatives.
On July 30, Dow said that its Union Carbide Corp. division had agreed to sell its stake in the Optimal Group of Cos. to joint venture partner Petroliam Nasional Bhd., or Petronas, for $660 million. The deal closed on Sept. 30. 

source from:www.thedeal.com