Dow Chemical will cut 2,500 jobs, or about 4% of its workforce, as part of its pending deal for Dow Corning announced in December.
The Midland, Mich.-based firm will also shut down silicones manufacturing facilities in Greensboro, N.C., and Yamakita, Japan, as well as certain administrative, corporate, and manufacturing facilities to further enhance competitiveness and streamline costs associated with the transaction.
The company will take a charge of about $410 million to $460 million in the second quarter of 2016 for asset impairments, severance, and other costs related to these measures, which are expected to be completed in the next two years.
These actions position Dow Chemical to capture $500 million in combined run rate annual synergies as a result of the restructured ownership of Dow Corning — consisting of $400 million in cost synergies, an increase from the previously stated $300 million target, and $100 million in growth synergies. The company also expects to achieve $1 billion of additional annual EBITDA.
The transaction will also be accretive to operating earnings per share, cash flow from operations, and free cash flow in the first full year after transaction close.
“We are moving quickly and effectively to integrate Dow Corning and deliver the synergies that will drive new levels of value creation for our customers and generate even greater returns for our shareholders,” Dow Chemical’s chairman and chief executive Andrew N. Liveris said in a press release.
Dow Chemical announced the deal for Dow Corning in December, when it also said it would merge with DuPont in an all-stock deal, which then valued the combined company at $130 billion, according to Reuters.