Dow Chemical Company

Andrew N. Liveris, Dow Chairman and CEO: We’re creating a petrochemicals company that will be a global leader from its first day of operation...

Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), have announced plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals company.

"We're creating a petrochemicals company that will be a global leader from its first day of operation, an $11 billion company that is well positioned to grow profitably across the industry cycle," said Andrew N. Liveris, Dow Chairman and CEO.

The joint venture, to be headquartered in the United States, will manufacture and market polyethylene, ethylenamines, ethanolamines, polypropylene, and polycarbonate.

Polyethylene (PE) and polypropylene (PP) comprise more than half of world polymer demand. PE is the most widely used of all plastics and can be found in everyday products from food packaging, milk jugs and plastic containers to pipes and liners. PP is a versatile plastic used in fibers, packaging films, non-wovens, durable goods, automotive parts, and consumer applications.

The joint venture is expected to have revenues of more than $11 billion (pro forma) and employ more than 5,000 people worldwide.

The transaction is subject to the completion of definitive agreements, customary conditions and regulatory approvals, and is anticipated to close in late 2008.

To form the new company, Dow will sell to PIC a 50 percent interest in the business assets included in the transaction. In turn, both PIC and Dow will place their share of the assets into the joint venture, with each party then taking a 50 percent equity interest in the new company.

The value of the five Dow global businesses that will form the joint venture is approximately $19 billion. Dow will receive approximately $9.5 billion (pre-tax) from PIC for the 50 percent interest.

"Dow and PIC have a great track record as partners, and we are excited to form this landmark joint venture that brings sustainable, long-term value to our companies and customers," said Michael R. Gambrell, Dow executive vice president for Basic Plastics and Chemicals.

"The joint venture between PIC and Dow will be positioned to flourish in high-growth economies through access to feedstock offtakes from future KPC refineries in emerging regions," said Maha Mulla Hussain, Managing Director of Petrochemical Industries Company of Kuwait.

"This will give the new JV company the distinct advantage of full integration from feedstocks to derivatives, while meeting growing customer demand in emerging markets."