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Dow Chemical Agrees to Worldwide Sponsorship of Olympics Through 2020
Dow Chemical Co., the world’s second-largest chemical maker, agreed to become a worldwide sponsor of the Olympics through 2020 to gain construction sales in host cities and boost brand awareness in emerging markets.
Dow will be the official chemical company of the Olympics for the next decade in a partnership with the International Olympic Committee, the Midland, Michigan-based company said today in a statement. Terms of the sponsorship weren’t disclosed.
Dow’s sponsorship makes a total of 10 companies paying an average of $90 million each for the four-year cycle ending in 2014, Gerhard Heiberg, chairman of the IOC’s Marketing Commission, said today in an interview in New York. Dow declined to say how much it will pay for its 10-year commitment. Other top-tier sponsors include General Electric Co. and Visa Inc.
Dow’s board approved the sponsorship after Heinz Haller, an executive vice president, pitched it as a $1 billion sales opportunity, mostly for materials used to build facilities in host cities, Chief Executive Officer Andrew Liveris said at an event in New York with the IOC. Earnings before interest, taxes, depreciation and amortization may reach $180 million, he said in an interview.
“All the things that go into making the equipment, we can be a big part of that,” Liveris said. “You can be guaranteed that nothing gets approved by the board of the Dow Chemical Company unless it generates shareholder value.”
Dow Products
The deal requires Olympic hosts to give Dow products preference as long as they meet a project’s technical requirements and are price competitive in the region, Bob Plishka, a Dow spokesman, said in a telephone interview.
Dow is creating an Olympics unit to coordinate sales from 30 businesses, including insulation, urethane foam for stadium seats, solar shingles and wire and cable, Liveris said. Dow’s sponsorship of the games may also increase consumer awareness, which “is sheer bonus” for a company that mainly sells to other businesses, he said.
Dow also sponsored the Olympics to reach customers in emerging markets, including Russia, where the 2014 winter games will be held, and Brazil, which is hosting the 2016 summer games, Haller said at the New York event. The 2012 summer games will be in London.
“What this does is, it brand associates Dow, like GE and others, with the games,” Liveris said.
Worldwide Sponsor
Dow, which got 68 percent of its $44.9 billion of sales outside North America last year, is the first new worldwide sponsor since Acer Inc., the largest supplier of notebook computers, agreed to a four-year contract that took effect with the 2010 winter games in Vancouver.
The so-called Worldwide Olympic Partners get exclusive marketing rights in their product category.
Liveris first discussed the prospect of a Dow sponsorship with the IOC over lunch at the Beijing games two years ago, the IOC’s Heiberg said. The financial crisis delayed a commitment until the subject was revived over breakfast at the Vancouver games in February, he said.
Dow has been affiliated with the games since it donated Styrofoam insulation for ice-skating rinks and bobsled runs at the 1980 winter games in Lake Placid, New York. Dow was an official supplier to Vancouver’s Olympic organizing committee.
Dow fell $1.46, or 5.5 percent, to $25.17 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 8.9 percent this year.
BASF SE is the world’s biggest chemical maker by sales, according to Chemical & Engineering News. Dow is the biggest U.S. chemical maker.
To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.
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