Dow Chemical Gets OK on Carbide Deal; Univision Takes S&P; 500 Slot
Antitrust regulators Monday cleared Dow Chemical Co.’s $7.3-billion purchase of Union Carbide Corp. after Dow agreed to divest itself of a key plastics technology and sell three other overlapping chemical businesses.
Also, Standard & Poor’s Corp. announced its choice to replace Union Carbide in the blue-chip S&P; 500 index: Univision Communications, the Spanish-language TV broadcaster.
The Federal Trade Commission said the merger creating the No. 2 chemical firm after DuPont Co. would have significantly reduced competition in development of new plastics products and technology.
“The commission’s order is intended to preserve competition in this and several other chemical markets over the long term, benefiting consumers with better products at lower prices,” said Molly Boast, acting director of the FTC’s Bureau of Competition.
The deal between the two chemical heavyweights was announced in August 1999 but became tangled in intense regulatory scrutiny both in the U.S. and Europe.
Under the FTC agreement, Dow will have to shed its process for producing linear low-density polyethylene (LLDPE), a key ingredient in plastic products such as trash bags and sealable food pouches, to BP Amoco, its former partner in the technology.
Dow’s global ethyleneamines business would be sold to Plano, Texas-based Huntsman Corp., the FTC said. Ethyleneamines are used in a variety of products including resins, lubricants, fungicides, pulp and paper.
Union Carbide’s stock (ticker symbol: UK) on Monday closed down 44 cents at $52.77 on the New York Stock Exchange, while Dow Chemical (DOW) closed 40 cents lower at $33.39.
Under the deal, Dow is offering 1.611 of its shares for each Union Carbide share.
After trading ended, S&P; said Univision (UVN) will replace Union Carbide in the 500-stock index. The date of the change wasn’t announced. Univision fell $1.20 to $40 before the announcement, but its stock may gain as it is added to funds that replicate the S&P; index, analysts noted.
