UpdateKuwait reverses K-Dow approval, venture lapses

29 December 2008 11:29  [Source: ICIS news]

(Recast for clarity)
(Updates with Rohm and Haas comments in paragraphs 8, 9) 

By Bohan Loh

SINGAPORE (ICIS news)--Dow Chemical’s proposed joint venture with Kuwait’s Petrochemicals Industries Company (PIC), K-Dow Petrochemicals, has lapsed due to the Kuwait Supreme Petroleum Council’s (SPC) decision to reverse a prior approval of the agreement, Dow said in a statement on Sunday.

“The partners have informed us that there will be official written notification of the decision within the next few days,” Dow said.

“Dow is extremely disappointed with the decision, and is in the process of evaluating its options pursuant to the Joint Venture Formation Agreement,” it added.

The US chemical major had signed a pivotal agreement with PIC to create a $17.4bn (€12.53bn) K-Dow petrochemicals joint-venture back in December 2007 and was mulling global projects when it begun operations in January 2009.

Speculation had mounted in recent weeks that negotiations to finalise the venture were becoming tough amid the on-going financial crisis and economic downturn.

PIC, a subsidiary of state-run Kuwait Petroleum Corp (KPC), had agreed to pay Dow $7.5bn to establish the joint venture, K-Dow Petrochemicals.

SPC’s withdrawal of its prior approval of the JV also sparked questions over Dow’s intended $18.8bn acquisition of specialty chemicals company, Rohm & Haas.

However, in a separate statement Rohm & Haas reiterated that completion of the K-Dow venture was not a closing condition for the proposed merger.

“Rohm and Haas Company continues to work diligently towards completing the proposed transaction with Dow in early 2009,” the statement said.

Bloomberg had reported that the US chemical giant might face a cash shortage to complete its purchase of Rohm & Haas.

“It is doubtful that Dow will be able to easily raise the funds,” the newswire quoted Sean Egan, managing director of Egan-Jones Ratings Co. 

Officials in Dow’s regional branch offices were unavailable for immediate comments.

($1 = €0.72)

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By: Bohan Loh
+65 6780 4359



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