Dow Chemical in Olympic deal

Dow Chemical Co said last week it would become a global sponsor of the Olympics, hoping it can bring in more than $1 billion of revenue in the next 10 years by supplying material to build game facilities and bolstering its brand.

Financial terms of the deal were not disclosed.

The Midland, Michigan-based company will become the official chemical company for the games, meaning rivals such as DuPont Co and BASF will not be able to sell insulation for walls, polymers to keep ice cold, or other supply materials, to host cities.

“The Olympics is a market,” Dow Chief Executive Andrew Liveris told Reuters. “This is a market and revenue opportunity that will generate $1 billion.”

Dow will join nine other companies, including McDonald’s Corp and General Electric Co as part of The Olympic Partner program, also known as TOP.

Dow’s sponsorship runs through 2020.

The agreement has some questioning the company’s rationale, as nearly all sponsors directly serve consumers, unlike Dow.

McDonald’s, for instance, aggressively reminds its customers that every time they buy a hamburger, they’re helping athletes around the world.

For Liveris, though, the sponsorship offers a chance to tout Dow — and the broader chemical industry — to an audience that might be unfamiliar with its products.

“This is an opportunity to say, ‘We’re not a chemical company. We’re a science company, a sustainable science company,'” Liveris said.

PERCEPTION

Last year Dow cut its dividend for the first time in history and increased its float through a share offering of more than $1 billion. The cash was needed in part to help fund the acquisition of rival Rohm & Haas.

After that buyout saga, the Olympic sponsorship could be frustrating to investors that rely on dividend checks or stock buybacks.

Source: Reuters

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