Dow to no longer pursue ethylene/PE - Liveris

13 December 2007 17:07  [Source: ICIS news]

DowBy Joseph Chang

NEW YORK (ICIS news)--Dow Chemical will no longer pursue ethylene and polyethylene (PE) projects as part of its “asset light” strategy once its 50/50 joint venture with Kuwait Petroleum Corp (PIC) is set up, Dow’s CEO said on Thursday.

“Dow will not pursue ethylene and PE deals on its own once this deal is concluded,” said CEO Andrew Liveris in a conference call with analysts and investors. “That will be the domain of this venture.”

As part of its asset light strategy, Dow will put much of its commodity businesses in the venture, including PE, polypropylene, polycarbonate, ethylene amines and ethanolamines.

Dow values the business it is putting in the JV at $19bn (€13bn). The company will receive a $9.5bn payment from PIC in exchange for its 50% stake.

“This joint venture will mitigate our cyclicality,” said Liveris. “We are placing about half our earnings elsewhere, and this JV will create hugely competitive projects from advantaged feedstocks going forward.”

The venture also inherits a number of Dow’s US and European facilities, some of which could be shut down in the future.

“We have made our assets competitive in the US and Europe, but all decisions on assets are in front of the board of the venture.”

And while the petrochemical and plastics joint venture itself will still be cyclical, Liveris pointed out that the returns will be higher.

“With a 40% return, I can take cyclicality,” he said.

“We have created the global petrochemical company of note,” said Liveris. “Stay tuned - Dow Chemical is not done yet.”

($1 = €0.68)

By: Joseph Chang
+1 713 525 2653

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