Dow and PIC of Kuwait Sign Binding Joint Venture Agreement to Launch K-Dow PetrochemicalsSource: www.gulfoilandgas.com 12/1/2008, Location: Middle East
The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC), a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), today announced that they have signed the Joint Venture Formation Agreement and other key definitive agreements regarding the formation of K-Dow Petrochemicals, a 50:50 joint venture that will be the leading global supplier of petrochemicals and plastics.
It is expected that the new company will begin operations no later than January 1, 2009, with closing on that date as articulated in the December 13, 2007 MOU announcement.
K-Dow will be a leading global supplier of essential petrochemicals and plastics and will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene and polycarbonate, and will also license polypropylene technology and market related catalysts.
"The signing of these documents is the critical step in the formation of K-Dow, which will immediately become a leading petrochemicals supplier globally," said Andrew N. Liveris, Dow chairman and chief executive officer. "The formation of K-Dow Petrochemicals will be a critical milestone in Dow’s transformation into an earnings growth company. This is a giant step in our strategy of growing our Basics businesses through joint ventures, reducing our capital intensity, and freeing up $9 billion in pre-tax cash proceeds to invest in our Performance businesses. We have effectively set the stage for our next major landmark - completing the proposed acquisition of Rohm and Haas in early 2009."
"I am very pleased with the outcome of our due diligence and thorough preparation to launch K-Dow Petrochemicals. The K-Dow joint venture will not only diversify Kuwait’s national economy, but it will also position Kuwait as a leader on the global business stage," said Maha Mulla Hussain, Chairman and Managing Director of PIC. "Through the K-Dow joint venture, PIC, in pursuit of its long term strategy, will enter a new arena of petrochemical products based on leading global technologies. This represents the best option for PIC to achieve a leading position in petrochemicals and to optimize growth between our connecting businesses of oil refining and basic petrochemicals while building on our long-standing, positive relationship with Dow."
The total enterprise value of the Dow businesses going into K-Dow is approximately $17.4 billion. This equates to $8.72 billion for each shareholder. The final proceeds of the transaction include usual adjustments of $1.2 billion, related to working capital and net debt.
Upon closing of the transaction, each shareholder plans to receive a $1.5 billion special cash distribution, paid by K-Dow.
The gross payment by PIC is expected to be approximately $7.5 billion, with the net payment of $6 billion, including the special cash distribution from K-Dow.
Dow expects to receive $9 billion in total pre-tax proceeds related to the transaction. These proceeds include the special cash distribution from K-Dow of $1.5 billion.
Dow and PIC also announced today that two of their existing 50:50 joint ventures will be moved into K-Dow: MEGlobal, a world leader in ethylene glycol, and Equipolymers, a supplier of PET resins. K-Dow will have estimated sales of $11 billion and with the addition of MEGlobal and Equipolymers the total annual revenue of K-Dow will be $15 billion.
The K-Dow transaction has received regulatory approvals from the U.S. Federal Trade Commission and the European Commission, and also received clearance from the U.S. Committee on Foreign Investment in the United States (CFIUS), but remains subject to customary closing conditions.
Petrochemicals News in Kuwait >>
Iran >> 7/28/2018 - Having the last turbo expander launched, SP20&21 ethane production met its final capacity. While all four turbo expanders of the Unit 105 launched, Al...
Netherlands/Holland >> 7/26/2018 - LyondellBasell (LYB) one of the world's largest plastics, chemical and refining companies, announced the cooperation with Karlsruhe Institute of Techn...
Russia >> 7/26/2018 - Gazpromneft Bitumen Materials, operator of the Gazprom Neft bitumens business, has acquired a high-technology manufacturing—logistics terminal (TA Bit...
Algeria >> 7/24/2018 - Sonatrach is in talks with oil majors and trading firms to start a trading joint venture after the Algerian state energy company reached a deal this y...
Fluids Drilling, Completion, Workover & Stimulation
Gasoline (Lead free)
Kerosene. Domestic use
Lubricants, Oils & Greases
Oil Treating & Refining
Related Articles: Aromatic Solvents Butene Cleaning Corrosion Inhibiting Crude Oil Diesel Fuel Ethylene Fluids Drilling, Completion, Workover & Stimulation Fluids/Chemicals Fracturing Sand Fuel oil Gasoline (Lead free) General Jet fuel Kerosene. Domestic use Lubricants, Oils & Greases Nitrogen Oil Treating & Refining Polyethylene Polyvinyl chloride Propane Sand, Sandblast Surfactants
|Kuwait Oil & Gas 1 >> 2 | 3 | 4 | 5 ||