Dow Chemical, like other U.S. chemical makers such as Dupont , is moving away from providing a wide range of products to a swathe of industries to focus on electronics, packaging and agriculture.
"Exiting our longest, oldest business tells you that we are prioritizing our capital on higher margin, more consistent earnings growth businesses," Dow Chemical Chief Executive Andrew Liveris told Reuters.
Other assets identified for sale by the world's No.1 chlorine producer on Monday included its epoxy business and some brine and energy assets, representing a total of $5 billion in revenue.
The bulk of what the company plans to sell is housed in its performance materials business, which is particularly exposed to swings in commodity prices.
Dow Chemical said in October it expected to raise between $3 billion and $4 billion from asset sales in the next 18 to 24 months.
It had said the company would sell parts of its chlorine and derivatives assets such as chlorinated organics - used in electronics and refrigerants - and vinyls, used to make a raw material for water pipes.
The largest U.S. chemical maker by sales has shed non-core businesses representing about $10 billion in revenue since 2009, including its Styron plastics business that it sold to private-equity firm Bain Capital Partners for $1.63 billion in 2010.
It sold its polypropylene licensing and catalyst business in October to smaller rival W.R. Grace & Co for $500 million.
The company said in August that it was looking at options for its European construction materials businesses.
Dow Chemical, which gets a quarter of its revenue from the performance plastics business, has also reduced its exposure to lower margin plastics and now focuses on plastics used in sophisticated packaging, diapers and wound-care products.
The company's shares rose nearly 3 percent to $40.04 by midday on the New York Stock Exchange. The stock has risen 30 percent over the past year.
Dow said on Monday it would shut about 800,000 tons of chlorine and caustic equivalent capacity in Freeport, Texas.
The capacity being shut down will be replaced with supply from new facilities that will come online in early 2014 with the start-up of the company's chloralkali joint venture with Japan's Mitsui & Co.
The news lifted shares of chloralkali suppliers such as Axiall Corp, Olin Corp and Westlake Chemical Corp.
"The announcement lifts a major overhang on the chloralkali industry and respective players, as the potential of overcapacity has kept many investors concerned over the future supply/demand balance," Wells Fargo analyst Frank Mitsch said.
Dow Chemical, however, is looking to sell its interest in the joint venture as part of this reorganization and will eventually buy a small amount of chlorine from the new owners of the JV after it divests its interest.
"We are not disposing of all the chlorine because we are retaining chlorine for our value add downstreams. We are only exiting that which is servicing the commodity part of chlorine" said Liveris.