Dow Agro sale still possible, but less likely

Midland, Mich.-based Dow Chemical Co. is still considering divesting Indianapolis subsidiary Dow AgroSciences LLC. But
chances that the chemical manufacturing giant will sell its local agricultural chemical and biotech unit have decreased.

In a conference call with analysts this morning, Dow Chemical CEO Andrew Liveris said his company spent the first
half of 2009 restructuring as a result of the recession. He said Dow went “very, very deep” into explorations
for divesting Dow AgroSciences—which has 1,200 employees in Indianapolis—although not so far as to enter negotiations
with any potential buyers.

Unless a sale could generate a full “strategic premium,” Liveris said he’d
rather hang on to the Dow AgroSciences business and grow it.

“Based on our strategic review and our desire
to move to higher-growth, technology-driven and innovation-based business platforms, I can tell you that our current thinking
and my personal preference is this business should be part of Dow’s long-term future,” Liveris told analysts.

“With that said, we remain open to exploring all options that will strengthen Dow and position it for growth while
at the same time maximizing value for our shareholders,” he continued.

Liveris said options for Dow AgroSciences
include strategic alliances with other businesses or an IPO.

Dow Agro’s profits and sales slumped in the
second quarter after the company racked up record earnings in the prior period.

The agricultural unit generated
$140 million in earnings before interest and taxes in the second quarter, a 61-percent drop from the same period last year.
Dow Agro had $338 million in earnings in the first quarter of 2009.

Revenue dipped 12 percent in the second quarter,
to $1.2 billion. Dow Agro attributed the decrease to unusually wet weather in North America and Europe, and extreme drought
in Argentina, which limited the use of its weed-killing chemicals. In addition, lower farm commodity prices drove farmers
to reduce costs, the company said.

Dow Chemical lost $486 million, or 47 cents a share, in the period compared
with profit of $762 million, or 81 cents a share, in the same period last year. Revenue fell 31 percent, to $11.3 billion,
down from $16.4 billion.

Dow Chemical’s loss was driven by charges related to its $16.5 billion buyout of
rival Rohm & Haas in April and dismal sales for chemicals.

Yet, aggressive cost-cutting by the company led
to a surprise profit when the one-time charges are stripped from the results.

Excluding those charges, Dow reported
adjusted earnings of 5 cents per share. Analysts polled by Thomson Reuters forecast, on average, a loss of 8 cents per share.
Analysts typically exclude one-time charges.

Dow Chemical’s shares rose 8.2 percent this morning, to $21.91
each.