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Dow Chemical raises buyback by $5 billion, to sell more assets

Andrew Liveris, Chairman and CEO of the Dow Chemical Company, participates in a group discussion on "Business by Design: Business with Integrity" during the second day of the Clinton Global Initiative 2012 (CGI) in New York on September 24, 2012. REUTERS/Lucas Jackson

(Reuters) - Dow Chemical Co raised its asset sale target by as much as 42 percent to $8.5 billion and increased its share buyback plan by $5 billion, as it looks to thwart hedge fund manager Daniel Loeb's push to split the company.

The increased buyback plan brings Dow's total share repurchase program to $9.5 billion.

Shares of Dow Chemical, which also raised its quarterly dividend to 42 cents per share from 37 cents, rose as much as 3 percent on the New York Stock Exchange on Wednesday.

Dow and rival Dupont are facing pressure from investors to raise shareholder returns by divesting businesses that are exposed to swings in commodity prices.

Dow, the No. 1 U.S. chemical maker by sales, said it now expects to raise $7 billion-$8.5 billion from divestitures by mid-2016. The company said it was on track to meet its earlier asset sale target of $4.5 billion-$6 billion by the end of 2015.

The company said on Wednesday it would sell Angus Chemical Co to Golden Gate Capital for $1.22 billion and said it expects the deal to close during the first quarter of 2015.

Dow has also put specialty chemical unit AgroFresh Inc and its sodium borohydride business on the block. It has also earmarked its epoxy business and some chlorine and derivatives assets for sale.

The company also said on Wednesday it planned to cut stakes in all of its Kuwait joint ventures to releasing money "for other strategic purposes, including shareholder remuneration."

Dow, which has narrowed its focus to packaging, electronics and agriculture, also re-organized its reporting units into five divisions from six. The company said the new structure would help it extract maximum value from its integrated structure.

Loeb has asked Dow to separate its commoditized raw material units from specialty chemicals businesses, but the company has said that keeping its units together helps lower costs.

Dow, which has been paying cash dividends every quarter since 1912, said the new dividend would be payable on Jan. 30 to shareholders on record as of Dec. 31.

Dow Chemical's shares were up 0.7 percent at $49.90 in afternoon trading.

(Reporting by Swetha Gopinath in Bangalore; Editing by Saumyadeb Chakrabarty)