Dow AgroSciences, the agricultural unit of global chemicals major Dow Chemical (NYSE:DOW), has sold off its loss-making European Dithane fungicide unit to Indofil Industries of Mumbai, India. The sale amount has not been disclosed yet. Dow regards this move as a stop-loss measure to cut its European losses. Earlier in January, one of Dow’s principal competitors, Air Products & Chemicals, decided to divest its Continental Europe Homecare business to The Linde Groupe of Germany for 590 million euros (approximately $750 million). We value the health and agricultural products business at 6% of Dow’s stock value.
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Indofil Industries specializes in agricultural chemicals and specialty & performance chemicals business. It was a manufacturer and distributor of dithane in India for nearly 40 years under the Rohm and Haas brand. This deal will help Indofil get dithane back on its portfolio while consolidating its position in the European mancozeb (a class of fungicide) market as a leading player.
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The deal only includes Dow’s dithane products sold in Europe and not the other parts of Dow AgroSciences’ dithane business. Dow is hoping that this deal will free it from running a loss-making business and will help it focus on new novel chemistry products which might lead to more profitable businesses in the future. The firm is also committed to its dithane business in other parts of the world and believes that its global production assets will help it compete in the dithane business better in the coming years.
This development bodes well for Dow AgroSciences in the short run as it was making massive losses in Europe, and the chances of the situation getting back to normal were unlikely in the near term with a slow economic recovery in Europe.