Dow Chemical Company (DOW) has further expanded its AgroSciences business in Canada by acquiring Hyland Seeds, a division of Thompsons Limited of Blenheim, Ontario. Hyland is recognized internationally for building industry-leading corn hybrids, soybeans, edible beans and cereal grains and has the largest privately owned multi-crop breeding program in Canada.

The addition of Hyland Seeds will further expand Dow AgroSciences’ current seeds business as the company anticipates the introduction of SmartStax in 2010 and Dow AgroSciences Herbicide Tolerant Trait Technology in corn in 2012. Under the terms of the agreement, Dow AgroSciences will acquire the Hyland brand and the sales, marketing and administrative functions.

The acquisition also includes germplasm, the R&D program with three R&D sites and the corn production facility. Further details of the agreement were not disclosed. Joint ventures and acquisitions are an integral part of Dow’s growth strategy. These provide access to potential markets, new technologies and feedstock, while at the same time lowering capital investment and risk.

Dow Chemical has become the world’s leading specialty chemicals and advanced materials company after acquiring Rohm & Haas for $16.3 billion. Management intends to place Rohm & Haas, along with some specialty chemical businesses, in a new Advanced Materials division.

The acquisition has increased Dow’s position in the specialty chemicals market by broadening its product range in paints, coatings and electronic materials. This new division expects to achieve annual sales of $14.0 billion and cost synergies of $1.3 billion.

Dow’s earnings of 24 cents in the third quarter of 2009 (significantly better than both the Zacks Consensus Estimate of 9 cents and 5 cents reported in the previous quarter) were driven by cost reduction and asset sales. The company achieved cost synergies of over $1 billion in the first nine months of 2009.

The Rohm & Haas acquisition, a positive for Dow, is expected to consolidate higher margin and higher growth specialty businesses and reduce volatility in earnings and cash flow, going forward. We have upgraded Dow Chemical from Neutral to Outperform.

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