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Dow and Petrochemical Industries Co. of Kuwait Announce Global Petrochemicals Joint Venture

Source: www.gulfoilandgas.com 12/13/2007, Location: Middle East

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The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of the State of Kuwait announced plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.

The joint venture, to be headquartered in the United States, will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene, and polycarbonate. The JV is expected to have revenues of more than $11 billion (pro forma) and employ more than 5,000 people worldwide.

The new venture will build upon PIC’s feedstock position and commitment to global petrochemicals growth, KPC’s position as one of the world’s top-10 energy/hydrocarbons companies, and Dow’s technology and market leadership – including its number one position in polyethylene, ethyleneamines and ethanolamines. Dow will also maintain its world-class security, environment, health and safety standards in the new venture. Customers, in turn, will benefit from an even stronger supplier having feedstock integration, global supply chain, advanced technologies, resources to grow with customer demand, and an ongoing commitment to the future of the petrochemical industry.

“The JV will enable PIC to expand and diversify its international petrochemicals presence, while building on our long-standing relationship with Dow. By selectively investing in downstream petrochemical businesses, we are maximizing the value of Kuwait’s hydrocarbons resources while diversifying our national economy and increasing job opportunities.”said Saad Al-Shuwaib, CEO of Kuwait Petroleum Corporation.

The transaction is subject to the completion of definitive agreements, customary conditions and regulatory approvals, and is anticipated to close in late 2008. To form the new company, Dow will sell to PIC a 50 percent interest in the business assets included in the transaction. In turn, both PIC and Dow will place their share of the assets into the joint venture, with each party then taking a 50 percent equity interest in the new company. The value of the five Dow global businesses that will form the joint venture is approximately $19 billion. Dow will receive approximately $9.5 billion (pre-tax) from PIC for the 50 percent interest.

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