13 December 2007 20:34 [Source: ICIS news]
By Joseph Chang
NEW YORK (ICIS news)--With the creation of its joint venture with Kuwait Petroleum Corp's PIC, Dow Chemical is essentially done with its “asset light” strategy and will now shift its focus to its specialty chemical business, Dow Chief Executive Andrew Liveris said on Thursday.
“In terms of asset light strategic moves that matter in converting our footprint in basic chemicals, that’s it. You won’t see us with existing assets or new projects independent of this JV doing asset light anymore,” said Liveris in an interview with ICIS. “We have some ethylene chain projects out there that over time will be put in as part of this JV if it works for our partner.”
Dow values the business it is putting in the 50-50 JV at $19bn (€13bn). The company will receive a $9.5bn payment from PIC in exchange for its 50% stake. The businesses from Dow generate an estimated $12bn in sales.
However, Liveris did not rule out additional joint ventures in its other commodity business such as chlorine, propylene and aromatics.
“To the extent that we have some commodity assets that can easily be carved out such as the styrene/polystyrene venture we’re concluding with Chevron, we’ll look at doing that around the world,” he said.
Dow will now shift the bulk of its attention toward the specialty group. “We can now pay all the time and attention we need, to getting it right on the performance side,” Liveris said.
Dow will focus on four platforms for growth in specialties - human health (food, nutrition, wellness), energy (alternative energy solutions, energy efficiency solutions), infrastructure & transportation (construction, water treatment, transportation), and electronics & communication (advanced materials), Liveris said.
“These are the areas in which Dow will look to acquire, grow and advance its new earnings streams,” he said.
Dow will aim to be selective in its acquisitions as it scans the landscape for deals.
“This is not the old Dow. We’re not going to just go buy a specialty chemical company because we have cash,” said Liveris. “I want to mimic a company like GE that has very methodical disciplines about where it will grow - looking for discontinuities and new needs based on technology and markets that it can serve.”
“We’re going to be targeted and really look at ways to add value,” he added. “Our acquisition of Dow Wolff Cellulosics and the systems houses our polyurethanes and epoxy businesses are buying, are great examples.”
Dow Chemical has been looking at about 60 deals in the past several years, noted Liveris.
Looking five years out, Liveris said he envisions Dow having sales of $50bn-$60bn, with “seventy to eighty percent of that in the high value-added specialty area.”
($1.00 = €0.68)
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