Andrew Liveris spoke on CNBC today about Dow (DOW), energy and jobs..
Liveris has been saying the same thing for three years. Based on the fact we have $133 oil (it was $35 when he started saying this) he bears listening too. That being said, as an investor having 66% of the business outside of the US is a good thing.
Now, let’s look at the announcement of the Kuwait deal from December of last year. The reasoning for it was same thing that Liveris has been saying all along:
What is important to note is that 50% of the business is being sold is being done so at $9.5 billion, the commodity business being only 25% of profits. If we do the math, the deal values the whole of Dow at roughly $76 billion. The company currently has a market cap of $38 billion.
Now, the petroleum based business are the ones being sold to Kuwait. That means that the per dollar barrel of oil becomes less important down the road because Dow will access it at the source. But, the worldwide prices of the end products that are based on that still matter as Dow will profit from their price appreciation with oil.
Essentially it looks like the input price of oil will matter less and the prices DOW will be able to get for the products it makes based on the per barrel price will remain elevated.
Enough said???
Disclosure (“none” means no position):Long Dow
