Dow to pursue legal action over failed Kuwaiti venture

06 January 2009 12:53  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--Dow will take legal action to protect the interests of the company and its shareholders, CEO Andrew Liveris said on Tuesday, as the chemicals giant outlined its plan of action following the collapse of its K-Dow venture with Kuwait’s Petrochemical Industries Company (PIC).

Dow said it had been approached by other interested parties for joint ventures with its basic plastics businesses following the voiding of the K-Dow agreement by Supreme Petroleum Council, and it could accelerate discussions if needs be.  

Dow said it would close the K-Dow olefins and polyolefins joint venture if PIC cured the breach of contract, but that it was establishing a formal process to secure a new joint venture partner.

The company was expecting the K-Dow joint venture with PIC to begin operations on 2 January and receive $7.5bn (€5.6bn) from the deal.

The venture was pivotal to Liveris’s strategy to lighten Dow’s asset base and create a more market-facing chemical company with the help of a yet-to-be-completed $18.5bn takeover of US specialities major Rohm and Haas.

Financial analysts have suggested that Dow could claim a break-up fee of $2.5bn from the Kuwaitis.

“Dow’s strategy will continue to involve aggressive steps to establish Dow as a high performance, earnings growth company organised around a strong portfolio of joint ventures and market-facing performance business divisions,” Dow said in a statement.

“Central to Dow’s strategy is its commitment to retain strong investment grade rating and to maximise shareholder return,” it added.

Dow’s shares plummeted in value following the decision by Dow’s partners in Kuwait to abandon the K-Dow joint venture.

The actions in Kuwait had accelerated the need for “decisive action”, Dow said, but the company added that its strategy remained as relevant as ever.

($1 = €0.74)

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Author: Nigel Davis
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