Mid-East, US group in $50bn bid for Dow – report

09 April 2007 06:22  [Source: ICIS news]

SINGAPORE (ICIS news)--A consortium comprising Middle Eastern investors and American buyout firms is preparing a $50bn (€37.5bn) bid for Dow Chemical in what could be the world's largest leveraged buyout, media reports said on Monday.

A financing package has been put in place for a break-up bid of between $52 and $58 a share and an approach valuing the company at a minimum of $50bn could materialise by the end of this week, Reuters reported, quoting The Sunday Express.

At least half of the capital is being provided by investors from Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman, with the rest contributed by a number of US buyout firms including Kohlberg Kravis Roberts, The Sunday Express had reported, quoting sources close to the deal.

The UK tabloid also reported in late February that Dow could get a take over offer of as much as $54bn from buyout funds.

The sale could affect a possible joint venture between Dow Chemical and Reliance Industries, The Financial Express, an Indian newspaper said.

Both sides are believed to be discussing a possible $20bn joint venture in which Reliance could take 59% stake, it added.

Dow’s basic chemicals and plastics businesses were expected to be spun off into a separate company in which Reliance might have agreed to pick the stake for $12bn, it said.

The joint venture was expected to set up manufacturing and research and development facilities in India, the US and in other developing countries.

Another Indian newspaper, The Times of India, reported earlier that Reliance may have dropped out of a race to buy a controlling stake in Dow Chemicals’ plastic and chemical business for $12bn.

The US major’s shares closed down 35 cents at $44.47 in New York on Thursday while on Monday morning, Reliance’s shares were up 0.92% to Indian rupees (Rs) 1,370 ($32.1) on the Bombay Stock Exchange.

Dow Chemical, Reliance and Kohlberg Kravis Roberts were not immediately available for comment.

($1=€0.75 / Rs42.70)

By: Florence Tan
+65 6780 4359

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