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Dow, Taminco Sign Choline Hydroxide Deal

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Dow AgroSciences LLC, a subsidiary of The Dow Chemical Company (DOW), has entered into a strategic supply deal for choline hydroxide with Taminco US Inc., a subsidiary of Taminco Corporation (TAM). The companies did not disclose the financial terms of the deal. Choline hydroxide is an important raw material component of Enlist Duo herbicide, which is specifically designed for the Enlist Weed Control System.

Per the agreement, Taminco will supply choline hydroxide to Dow AgroSciences for herbicidal uses. The agreement will be instrumental in the production of Dow AgroSciences’ proprietary 2,4-D choline which is a primary component in Enlist Duo manufactured with Colex-D Technology.

Dow AgroSciences plans to ramp up seed production and its supply of Enlist Duo herbicide with Colex-D Technology to support the anticipated Enlist launch. The Colex-D Technology package will offer customers considerable benefits including ultra-low volatility, minimized potential for drift, decreased odor and improved handling characteristics.

Taminco is the world’s largest producer of alkylamines and alkylamine derivatives and will support one of the major initiatives of Dow through innovation. Dow’s Enlist Weed Control system will help in agricultural practices and Dow feels that its alliance with Taminco will take it forward to meet demand in critical times.

Dow reported mixed second-quarter 2013 results on Jul 25. The company’s profit soared in the quarter on strength in its agriculture business and a sizeable gain from an arbitration case. Adjusted earnings beat the Zacks Consensus Estimate, while sales missed. Gains across agricultural sciences and performance materials were offset by declines in feedstocks and energy and performance plastics.

Dow is benefiting from strong fundamentals in agriculture and food markets, and is leveraging its North American feedstock advantage. A string of innovative products in its pipeline adds to its strength. However, weakness in the electronics and construction end-markets may continue to be affected moving ahead. Moreover, Dow still faces challenges in Western Europe and is exposed to significant pension headwinds.

Dow currently holds a Zacks Rank #3 (Hold).

Other companies in the chemical industry worth considering are Northern Technologies International Corp. (NTIC) and Eastman Chemical Co. (EMN). Both of them hold a Zacks Rank #2 (Buy).

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