Dow Chemical, Union Carbide
Press Conference Summary
August 4, 1999

Stavropoulos: Thank you. Good afternoon everyone and thank you for joining me on this exciting day. As you know, the Board of Directors of Dow Chemical and Union Carbide have approved a definitive merger agreement for the two companies. Before I take a few minutes to outline some of the benefits of this combination, I would like to introduce some people joining me on the call. I am here with Bill Joyce, Chairman and Chief Executive Officer of Union Carbide. From Dow Chemical we have Mark Fagas, Director of Executive Communications. I should also mention that back at Dow headquarters, our Media Relations Director, Ann Ainsworth, who’s telephone number is (517) 636-3920 and from Union Carbide we have Joe Byck, Vice President of Strategic Planning.

As I said, Dow and Union Carbide today announced a tax free stock to stock transaction. This merger combines two of the industries most technologically advanced global companies. We will have a combined annual revenue of over $24 billion. Operating income of $3 billion. A market capitalization in excess of $34 billion and assets over $30 billion. We are creating the world’s number two chemical company overall with leadership positions in both performance and basic businesses.

This combined company will operate in 168 countries and employ about 49,000 people and rank number 50 on the Fortune 500. This transaction is a giant step in Dow’s strategy to transform the company into the world’s best value growth company in the chemical industry.

Since Dow’s transformation began in 1993, the company has reduced structural costs by $2.2 billion and divested over $10 billion of non-strategic businesses. The company also added $10 billion in new
business assets. $5 billion in new capacity additions and $5 billion in acquisitions. In phase one of our transformation, we improved and focused on our portfolio. We became the world’s low cost producer, developed a more consistent earnings stream, and achieved financial flexibility. That made
us a better company.

In phase two, we are not only getting better and we are getting bigger, including increased productivity and higher growth and earnings per share. This merger jump starts the growth phase of our strategy. It immediately adds new performance businesses as platforms for growth while strengthening the ones we already have. The merger also gives us the opportunity to extend our low cost production capabilities and to achieve higher cash generation from our basic businesses. Together, our strength and balance
sheet gives us the ability to further invest in internal growth and acquisitions. Bill Joyce will join the Dow Board of Directors as Vice Chairman and will be a member of the Integration Team. In addition, one
other member of the Union Carbide board will also join the Dow board bringing the total number to 17.

Now, let me turn the call over to Bill Joyce. Bill?

Joyce: Thank you, Bill. This is a right move at a good time in the consolidating chemical industry where fewer more powerful companies will exist. The combination of Dow Chemical and Union Carbide sets the gold standard for the industry. With its leading technologies and outstanding facilities, the new Dow has even stronger long term prospects for profitable growth and enhancing shareholder value.

Dow and Union Carbide are companies with similar cultures, dedication and technology to high productivity and equality standards. Both have long histories to commitment to their respective customers and employees as well as responsible care in the communities where we operate. The merger will draw upon considerable talents of the employees to both Union Carbide and Dow. A joint transition team has been established to drive the rapid integration of the two companies, combining the best practices and talents from each company to create the preeminent chemical company in the world. I look forward to a smooth transition.

Now let me turn the call back to Bill. Bill?

Stavropoulos: Thank you, Bill. Dow Chemical and Union Carbide each have a proven record of reducing costs. In the combination, we expect to achieve annual cost savings of at least $500 million. We will do this by rationalizing corporate structural costs, achieving procurement savings, including stock, and improving supply chain management. The scale and integration achieved will significantly reduce our per unit cost. Savings are expected to begin upon closing and will be fully realized within two years with half in year one. After the integration is completed, it is anticipated that the company will have a work force of approximately 49,000 people reflecting a reduction of about 4% of the combined work force. We will seek to minimize work force effect of the transaction through a combination of reduced hiring, attrition, and other measures. Of course, all Union contracts will be honored.

Let me review the terms of the transaction. Union Carbide stockholders will receive .53 shares of Dow for each share of Union Carbide they own. Based upon Dow’s closing price on August 3, 1999, the transaction value is over $11 billion. This includes the assumption of $2.2 billion of net debt. The
transaction is expected to be accounted for as a pooling of interest and accretive to Dow’s earnings per share in the first year after closing. We expect that the transaction will be completed early in the first quarter of the year 2000.

Before we open up for questions, let me summarize. Together, with an increased scale and geographic scope, the combined company will be well positioned for the next peak of the cycle. We will have a broadened customer base across a wide range of products and applications and we will be able to serve our customers even better. We are creating a global corporation with the vision, management, depth, and technological leadership to reach ambitious financial goals. Annual EPS growth in excess
of 10% per year across the cycle. Operator, let’s open up for questions.