Dow Confirms Intent to Adopt Stock Repurchase Plan Immediately Upon Separation From DowDuPont
Share Repurchase Plan to Begin under Rule 10b5-1
MIDLAND, Mich. - March 18, 2019 - Dow Inc., a wholly owned subsidiary of DowDuPont Inc. (NYSE: DWDP) announced today that Dow Inc. has adopted a stock repurchase plan (the “plan”) with a broker dealer under Rule 10b5-1 of the Securities and Exchange Act of 1934. The plan will facilitate the repurchase of Dow common stock as early as April 2, 2019, under Dow’s previously announced $3 billion stock repurchase program, to be launched after Dow’s separation from DowDuPont.
A 10b5-1 plan permits a company to repurchase its common stock during times when it would not normally be in the market due to possible awareness of material non-public information, so long as the company adopts a written, prearranged trading plan at a time when it is not aware of material, non-public information regarding the company or its securities. Under the plan, the broker dealer will have the authority to repurchase Dow shares of common stock in accordance with the specific prearranged terms of the plan relating to time, price and volume (among others), without further direction from Dow, during the periods specified in the plan. Dow intends for such repurchases to comply with the time, price and manner conditions of Rule 10b-18 and, following the first four weeks of trading, the volume condition of the rule.
“Taken together, Dow’s $3 billion open share repurchase program and our industry-leading $2.1 billion annual dividend payout will serve as critical enablers of delivering on our commitment to return approximately 65 percent of net income to our owners across the cycle,” said Howard Ungerleider, president and chief financial officer elect, Dow.
Dow Separation and Distribution of Common Stock
On March 13, DowDuPont announced that the U.S. Securities and Exchange Commission declared effective Dow’s Registration Statement on Form 10, marking the final regulatory milestone in the company’s process to separate on April 1. The Form 10 includes information regarding the separation of Dow, the distribution and Dow’s business, and can be found on DowDuPont’s website.
On March 8, DowDuPont announced that its Board of Directors had approved Dow’s separation. In connection with the separation, the DowDuPont board of directors declared a pro rata dividend of all of the outstanding shares of Dow common stock. The dividend is expected to be payable on April 1, 2019, the distribution date, to DowDuPont stockholders of record as of the close of business on March 21, 2019, the record date.
Also on March 8, Dow’s board of directors declared a dividend for the second quarter of 2019, to be paid on June 14, 2019, of $525 million in the aggregate on pro rata basis to Dow stockholders of record as of the close of business on May 31, 2019.
On the distribution date, each DowDuPont stockholder will receive one (1) share of Dow common stock for every three (3) shares of DowDuPont common stock they held on the record date. Registered DowDuPont stockholders will receive cash in lieu of any fractional shares of Dow common stock.
No action is required by DowDuPont stockholders to receive shares of Dow common stock in the distribution. DowDuPont stockholders are encouraged to consult with their financial and tax advisors regarding the specific implications of the distribution, including the specific implications of buying or selling DowDuPont common stock on or before the distribution date and the U.S. federal, state and local or foreign tax consequences, as applicable, of the distribution.
The distribution of Dow common stock is subject to the satisfaction or waiver of certain additional customary conditions which are expected to be satisfied by the distribution date.
Dow combines science and technology knowledge to develop premier materials science solutions that are essential to human progress. Dow has one of the strongest and broadest toolkits in the industry, with robust technology, asset integration, scale and competitive capabilities that enable it to address complex global issues. Dow’s market-driven, industry-leading portfolio of advanced materials, industrial intermediates, and plastics businesses deliver a broad range of differentiated technology-based products and solutions for customers in high-growth markets such as packaging, infrastructure, and consumer care. Dow is a subsidiary of DowDuPont (NYSE: DWDP), a holding company comprised of Dow and DuPont with the intent to form three strong, independent, publicly traded companies in agriculture, materials science and specialty sectors. More information can be found at www.dow.com.
Cautionary Statement about Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance, financial condition, and other matters, and often contain words such as “believe,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “seek,” “should,” “strategy,” “will,” “will be,” “will continue,” “will likely result,” “would,” “target” and similar expressions, and variations or negatives of these words. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.
Forward-looking statements include, but are not limited to, expectations as to future sales of Dow’s products; the ability to protect Dow’s intellectual property in the United States and abroad; estimates regarding Dow’s capital requirements and need for and availability of financing; estimates of Dow’s expenses, future revenues and profitability; estimates of the size of the markets for Dow’s products and services and Dow’s ability to compete in such markets; expectations related to the rate and degree of market acceptance of Dow’s products; the outcome of certain Dow contingencies, such as litigation and environmental matters; estimates of the success of competing technologies that may become available and expectations regarding the separations and distributions and the benefits and costs associated with each of the foregoing.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements are based on certain assumptions and expectations of future events which may not be realized and speak only as of the date the statements were made. In addition, forward-looking statements also involve risks, uncertainties and other factors that are beyond Dow’s control that could cause Dow’s actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, but are not limited to: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; ability to protect, defend and enforce Dow’s intellectual property rights; increased competition; changes in relationships with Dow’s significant customers and suppliers; unanticipated expenses such as litigation or legal settlement expenses; unanticipated business disruptions; Dow’s ability to predict, identify and interpret changes in consumer preferences and demand; Dow’s ability to realize the expected benefits of the separations and distributions; Dow’s ability to complete proposed divestitures or acquisitions; Dow’s ability to realize the expected benefits of acquisitions if they are completed; the availability of financing to Dow in the future and the terms and conditions of such financing; and disruptions in Dow’s information technology networks and systems. Additionally, there may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business.
DowDuPont, Inc. (“DowDuPont”), Dow’s current parent, is engaged in a series of reorganization and realignment steps to realign its businesses so that the assets and liabilities aligned with the materials science business will be held by legal entities that will ultimately be subsidiaries of Dow Inc. ("Dow") and the assets and liabilities aligned with the agriculture business will be held by legal entities that will ultimately be subsidiaries of Corteva Inc. ("Corteva"). Following this realignment, DowDuPont expects to distribute its materials science and agriculture businesses through two separate U.S. federal tax-free spin-offs in which DowDuPont stockholders, at the time of such spin-offs, will receive pro rata dividends of the shares of the capital stock of Dow and of Corteva, as applicable (the "distributions"). DowDuPont (after the separations and distributions referred to as “DuPont”).
Risks related to the separations and distributions and to achieving the anticipated benefits thereof include, but are not limited to, a number of conditions which could delay, prevent or otherwise adversely affect the separations and distributions including risks outside the control of Dow including risks related to (i) our inability to achieve some or all of the benefits that we expect to receive from the separations and distributions, (ii) certain tax risks associated with the separations and distributions, (iii) our inability to make necessary changes to operate as a stand-alone company following the separations and distributions, (iv) the failure of our pro forma financial information to be a reliable indicator of our future results, (v) our inability to enjoy the same benefits of diversity, leverage and market reputation that we enjoyed as a combined company, (vi) restrictions under the intellectual property cross-license agreements, (vii) our inability to receive third-party consents required under the separation agreement, (viii) our customers, suppliers and others' perception of our financial stability on a stand-alone basis, (ix) non-compete restrictions under the separation agreement, (x) receipt of less favorable terms in the commercial agreements we will enter into with DuPont and Corteva than we would have received from an unaffiliated third party and (xi) our indemnification of DuPont and/or Corteva for certain liabilities.
Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. For a more detailed discussion of Dow’s risks and uncertainties, see the “Risk Factors” contained in Dow’s registration statement on Form 10, as amended, filed with the Securities and Exchange Commission.
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