The Dow Chemical Company and Petrochemical Industries Company of Kuwait Announce Global Petrochemicals Joint Venture
The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), announced plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.
"We're creating a petrochemicals company that will be a global leader from its first day of operation, an $11 billion company that is well positioned to grow profitably across the industry cycle," said Andrew N. Liveris, Dow Chairman and CEO. "For Dow, this marks an important milestone in our transformational strategy: growing our Basics businesses through joint ventures; reducing our capital intensity; and, freeing up cash to invest in our portfolio of Performance and Market Facing businesses."
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 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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