Corporate Catalysis

From vast, subterranean Michigan streams Dow Chemical Co. pumps brackish water, produces aspirin, phenol, ammonia, chlorine. From the vast Pacific, Great Western Electro-Chemical Co. dredges salt, manufactures liquid chlorine, caustic soda, caustic potash. In a corporate chemical reaction last month these two companies decided to combine. Last week their stockholders approved the process. Catalyst of the consolidation was Willard Henry Dow, elder son of the late, great Chemist Herbert Henry Dow. No chemical genius but an efficient business executive, Willard Dow graduated from University of Michigan in 1919, went to work for his father as a department head, succeeded him as president eight years ago. A chemical putterer since he was ten, good-looking, even-tempered Willard Dow is extremely popular with his employes, most of whom call him by his first name.

Although Dow Chemical has branches elsewhere, the root of its business is still in Midland, Mich., where in 1890 Founder Herbert Dow, two years out of Case School of Applied Science, first set up shop. There plumbing 1,200 feet to a huge salt pool, he began refining the brine into everything from patented laxatives to synthetic indigo dyes.

Midland's brine deposits have brought stockholders dividends as regularly as Epsom salt brings relief. Last year (ending May 31, 1938) the company netted $3,895,269, approximate average for 1934-38. Never before in a merger, Dow has a good reason for this one: it wants a West Coast branch,* and Great Western offers that as well as exclusive rights to cheap processes of making chloroform, carbon tetrachloride, hexachloroethane.

Great Western is situated in Pittsburg, Calif., 50 miles northeast of San Francisco. In 1920, when the four-year-old company was ailing, Banker-Chairman Mortimer Fleishhacker installed able, ambitious Jacob F. C. Hagens as president. The company promptly made its first profit--$100,000; last year it cleared $531,852.

To clinch the deal, which will cost his company almost $12,000,000 in stock, President Dow dangled an attractive proposition before Great Western's stockholders. For each preferred share they hold, they will get three-sixteenths of a share of Dow common; for each common share (whose price zoomed from $60 to $132 on news of the merger), one share of Dow common (about $134). The merger will make Great Western a Dow division with Jacob Hagens its manager.

*Io-Dow Chemical Co., a Long Beach, Calif, subsidiary, manufactures only iodine from oil-well bittern (brine waste).

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