01 December 2008 14:47 [Source: ICIS news]
LONDON (ICIS news)--Dow Chemical has signed its pivotal agreement with ?xml:namespace>
Two of Dow and PIC’s existing JVs, MEGlobal and PET maker Equipolymers, will be moved into K-Dow, the partners said, taking estimated K-Dow annual sales from $11bn to $15bn.
Speculation had mounted in recent weeks that negotiations to finalise the venture were becoming tough in the current market environment.
Dow said, however, that it is expected the agreement with PIC will close no later than 1 January 2009 and the new company would begin operations on that date.
Dow expects to receive $9bn in total pre-tax proceeds related to the transaction, including a special cash distribution from K-Dow of $1.5bn.
It had originally expected to receive $9.5bn from the deal that places a large proportion of its olefins and polyolefins capacity into the new 50:50 held company.
It will also license polypropylene technology and market related catalysts, Dow said.
“The formation of K-Dow Petrochemicals will be a critical milestone in Dow’s transformation into an earnings growth company," said Dow Chemical CEO Andrew Liveris.
“This is a giant step in our strategy of growing our basics businesses through joint ventures, reducing our capital intensity and freeing up $9bn in pre-tax cash proceeds to invest in our performance businesses,” he added.
“We have effectively set the stage for our next major landmark - completing the proposed acquisition of Rohm and Haas in early 2009."
Dow has agreed to buy the US-based specialty chemicals maker in a deal valued at $18.8bn and merge Rohm and Haas into a new, market-facing materials business for the group.
"The K-Dow joint venture will not only diversify
($1 = €0.79)
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