Good day everyone, welcome to the Dow and Corning conference call. This call is being recorded. I would like to now turn the conference to your host, Mr. Jack Broodo. Please go ahead, sir.
Thank you, Augusta. Good morning, everyone, thank you for joining us. Today, Dow and Corning are making this call available to investors and media via webcast. We will discuss more details regarding the announcement made earlier this morning surrounding the definitive agreement to restructure the ownership of the Dow Corning joint venture. Joining me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer, Howard Ungerleider, Vice Chairman and Chief Financial Officer. From Corning, we have Wendell Weeks, Chairman, Chief Executive Officer, and President, who will describe the benefits of the transaction from the Corning perspective. Around 6:30 A.M. this morning, a release covering Dow's announcement went out on Business Wire and was posted on dow.com. We have prepared slides to supplement our comments in this conference call. These slides are posted on Dow's website and through the link to our webcast.
Some of our comments today include statements about expectations of the future. Those expectations involve risk and uncertainties. We cannot guarantee the accuracy of any forecast or estimates, we don't plan to update any forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see our SEC filings. In addition, some of our comments reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures is contained on the Dow website. Unless otherwise specified, operating EPS, EBITDA, and EBITDA margin exclude certain items. Slide three has the agenda for today's call. Andrew and Wendell will provide an overview of today's announcement, including the strategic rationale for each company. There will be no Q&A following this presentation. With that, I'll hand the call over to Andrew.
Thank you, Jack, welcome everyone, good morning, thank you for dialing in today. If you look at slide four, we are very delighted that you could join us for this significant milestone announcement, which will benefit both Dow and Corning shareholders. Today marks a pivotal moment in Dow's, Corning's, and Dow Corning's history, as it represents the transition of a successful and thriving relationship in a 70-year-old joint venture, over 70 years, that Dow and Corning together built from the ground up. Both Dow and Corning just take great pride in this joint venture. I just would like to personally thank Wendell Weeks, the CEO of Corning, and his team at Corning for their strong leadership and engagement during our tenure working together.
Corning has been a great partner to Dow and will always be a great partner to Dow and of course, with this incredible successful joint venture we've had for these many decades. Dow Corning is the preeminent silicones player in the world, and today is a significant company in its own right. For the past 70-plus years, it's grown to hold an impressive global commercial and manufacturing footprint. Dow Corning is a tremendous joint venture with a focus on advanced materials and polysilicon via the Hemlock joint venture. Today, after a thorough evaluation and a lot of hard work by a lot of great people, we're very pleased to tell you that with the approval of both of our boards of directors, both Dow and Corning have reached a momentous agreement that we believe releases significant value for both companies and our shareholders.
If you turn to slide five, just over a year ago, Dow declared our intention to clean up our joint ventures, and today's announcement once again illustrates that we are acting on our plan. In May of this year, we fully consolidated our interest in Univation. In October, we announced our intent to reduce Dow's ownership of MEGlobal. Today, we announced the strategic realignment of Corning's and our own ownership in Dow Corning, resulting in our ownership of 100% of Dow Corning, whose silicones business is the cornerstone of this 72-year-old joint venture. For Dow, owning 100% of Dow Corning's silicones business is the next step in our portfolio evolution as we drive higher, more stable earnings, deliver strong cash flows, and release value for our shareholders. This transaction is equivalent to multiple bolt-on acquisitions, at a lower risk given our long-standing ownership of the joint venture.
We are very familiar with Dow Corning's silicones technology platform, their end-use applications, and their customers. Consequently, this transaction will open up adjacent markets and geographies, create scale and relevance in front of customers, and significantly increase the breadth of product offerings across the Dow and Dow Corning businesses. Under the terms of the agreement, Dow will become the 100% owner of Dow Corning, currently a 50/50 joint venture between Dow and Corning. Dow and Corning will continue their current arrangements with Hemlock Semiconductor, which will continue to operate as usual. The transaction will add more than $1 billion in additional EBITDA for Dow. Importantly, the transaction is expected to be accretive to Dow's operating EPS, operating cash flow, and free cash flow in year one.
There is tremendous value to Dow in the synergy capture. Here, Dow is uniquely positioned to access quick win synergies in both cost and growth categories totaling $400 million. The cost synergies represent Dow's proven ability to leverage our low-cost back-office functions, as well as our track record of driving the benefits of a shared global and regional infrastructure. The growth synergies stem from a broader set of technology platforms and material science capabilities that come from the combined innovation engines of Dow and Dow Corning.
As a result of our long ownership in Dow Corning, this is a business and technology that we know very well, and we already see tremendous opportunities to leverage Dow's science and engineering capabilities to drive innovation in the targeted end markets that we've said we want to go narrower and deeper in, like automotive, building construction, and personal care, to name a few. In short, the strategic rationale for Dow is clear. It enhances Dow's market-facing businesses with a high-quality silicones franchise, while also providing a catalyst for growth. It allows Dow to accelerate our narrow and deeper focus in key value chains, and it releases value for our shareholders through the realization of substantial synergies. Turning to slide six, I'll now go through the financial elements of the transaction, including expected synergies.
This transaction provides an opportunity that's unique to Dow to solely own the silicones business and secure all of the synergies. We expect the transaction will add more than $1 billion of EBITDA to Dow once we have fully realized the cost and growth synergies. This transaction has an implied EBITDA multiple that is consistent with precedent transactions at 10.8x the estimated 2006 EBITDA for Dow Corning silicones business. When you consider the value released by the synergies that are unique to Dow as the owner, the implied transaction multiple is below six times, representing a highly attractive and accretive transaction for Dow shareholders. Importantly, the structure of this transaction allows Dow to preserve its financial flexibility, and we anticipate that Dow's net debt to total capital ratio will be in line with what we reported at the end of the third quarter of 2015.
Regarding the synergies, we expect to benefit from quick win synergies and complementary market offerings that will drive growth. We anticipate to achieve the full run rate of $300 million on the cost synergies by the end of year two. Given the longer-term nature of growth synergies, we expect to realize those by year three, which will add $100 million of EBITDA. On this point, let me speak to how this transaction catalyzes growth, whether through enhanced sensory experience in consumer and coating applications, a more complete material set for formulation and synthesis in construction markets, or through broader product offerings in the energy efficiency and automotive areas. We see significant opportunity to leverage Dow's innovation capabilities, such as in high throughput research and development, and by achieving critical mass in our value chains. We already see many exciting opportunities aligned with our narrow and deeper end market focus.
I would like to turn it over to my partner and friend, Wendell Weeks.
Thank you, Andrew, and good morning, all. Page seven illustrates Corning's recently announced strategy and capital allocation framework, which consists of a focused portfolio of three core technologies, four manufacturing and engineering platforms, and five market access platforms. By focusing 80% of our resources on opportunities that use at least two of the three categories, we believe that we can increase our probability of success, lower our cost of innovation, and create higher and more sustainable competitive advantages. As I said during our conference call, Dow Corning falls outside the technology and manufacturing platform's core to our strategy framework. Let's turn to page eight. I believe that the strategic realignment we're announcing today will create significant value for Corning shareholders by focusing our portfolio, increasing our financial strength, while allowing us to retain the upside of Hemlock.
I'd like to provide a bit more detail on the structure of the realignment. Corning will exchange its 50% interest in Dow Corning for 100% of the stock of a newly formed Dow Corning entity that will become a wholly owned subsidiary of Corning. The new entity will own approximately 40% interest in Hemlock Semiconductor and approximately $4.8 billion of cash. As a reminder, Hemlock is a leading provider of polycrystalline silicon and other silicon-based products used to manufacture semiconductor and solar devices. Hemlock's products and manufacturing processes complement Corning's, and Hemlock offers market access for the solar and semiconductor industries, which are relevant to several current and emerging growth programs at Corning. We see additional upside in Hemlock as the solar industry recovers. We believe that the realignment is a win for Corning shareholders.
We are confident that Hemlock and deployment of the new entity's $4.8 billion will create significant value for our shareholders, including EPS accretion. Before I turn the call back to my good friend Andrew, I want to personally thank him and his team for their leadership and contributions to Dow Corning. We are absolutely delighted to remain partners through our continued ownership of Hemlock. I'll now turn the call back to Andrew for some closing comments.
Thank you, Wendell. As you've heard this morning, we have made significant progress already on this transaction. We expect to close by the middle of 2016. From a financing standpoint, we have the agreements in place to execute the transaction. The Dow teams will mobilize to start studying the synergy opportunities in greater detail and develop our plans to access those benefits as quickly as possible. Really to sum things up from a Dow perspective, we will execute this transaction with the commercial, operational, financial discipline that truly sets Dow apart. Just expect us to keep delivering. Before I hand the call over to Jack Broodo, the two companies, Dow Chemical and Corning, are storied American names, and they've had storied leadership that precede Wendell and I.
I know I speak for Wendell, and he may want to comment himself, that our partnership has defined America through this joint venture in the ability to be an innovator and a leader in adding value to the American business and customer community and to our shareholders. I don't anticipate that's going to change at all. My respect for Corning is utmost, and my respect for them as a company to do what is right from an innovation point of view is astonishingly amazing. What Wendell and his team have done and being great partners in this transaction is something to be celebrated. Thank you very much, Wendell, and I don't know if you want to say anything before Jack finishes the call.
I look forward to doing the next great thing together, my friend.
That's a good deal. All right, Jack Broodo, over to you.
Thank you, Andrew and Wendell. Everyone, we appreciate your interest in The Dow Chemical Company and Corning Incorporated. For your reference, a copy of our prepared comments will be posted on Dow's website later today. This concludes our call for today. We look forward to speaking with you again very soon.
That does conclude today's conference. Thank you all for your participation.