01 December 2008 16:59 [Source: ICIS news]
(adds updates throughout)
HOUSTON (ICIS news)--The K-Dow Petrochemicals joint venture (jv) will begin considering projects around the world when it starts operations in January, Dow Chemical CEO Andrew Liveris said on Monday.
Dow Chemical has signed its pivotal agreement with Kuwait’s Petrochemical Industries Co (PIC) to create the $17.4bn (€13.7bn) K-Dow petrochemicals joint venture, the US chemicals giant said on Monday.
PIC is a subsidiary of Kuwait Petroleum Corp (KPC).
Under the structure of K-Dow and Kuwait Petroleum, a variety of projects are being considered in such places as China, India and Vietnam, Liveris said.
In addition, K-Dow will also discuss gas-extraction projects, Liveris said. In fact, Dow's Libyan project will now be in the K-Dow mix, he said.
The joint venture could also give Kuwait Petroleum access into developed nations, such as Germany and the US - although this is not being actively discussed, Liveris said.
In all, the K-Dow joint venture has made Dow Chemical a virtual oil and refinery player, Liveris said.
"We've spent three decades not being back integrated," he said. "Now, with the sign of the pen we've become virtually back integrated through K-Dow."
Unde the joint venture, 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 Kuwait’s national economy, but it will also position Kuwait as a leader on the global business stage,” said PIC chairman and managing director Maha Mulla Hussain.
($1 = €0.79)
Additional reporting by Nigel DavisFor more on Dow Chemical visit ICIS company intelligence
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|