It looks like activist investors finally will get their way with Dow Chemical Co. (NYSE: DOW) and it will divest part of its business. Actually, this is a win-win for everyone around, companies and investors included. Dow Chemical announced that it has decided to split off and sell one of its units — its chlorine business — to Olin Corp. (NYSE: OLN).

By purchasing the chlorine segment from Dow, Olin will assume the role of the largest chlorine producer in the world. Ultimately this works out very well for Dow because the company can sell off one of its lowest margin segments for a considerable rate and it will end up owning just slightly over 50% of the new company formed from this.

In fact, the new company is expected to have revenues as high as $7 billion annually. The deal is expected to close by the end of 2015.

The activist hedge fund, Third Point, headed up by Daniel Loeb, was calling for Dow to split up part of its operations just a year ago.

In terms of the actual deal, $2 billion of cash and cash equivalents will be paid to Dow. Also included in the deal is an estimated $2.2 billion in Olin common stock and about $800 million of pension assumptions and other liabilities.

In an entirely separate transaction, Dow agreed to supply Olin with ethylene from the Gulf of Mexico.

Olin was previously the oldest maker of chlorine in the United States, and with this purchase it will now take over the mantle as the largest producer of chlorine.

Olin has a market cap of about $2.6 billion, compared to Dow’s market cap of $55.5 billion.

Shares of Dow were up 3.2% at $47.90 just after the opening bell. The stock has a consensus analyst price target of $52.05 and a 52-week range of $41.45 to $54.97.

Shares of Olin were up over 22% at $33.34, in a 52-week trading range of $20.43 to $34.34. The consensus analyst price target is $26.14.

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