The Dow Chemical Co. (Dow; Midland, Mich., USA; www.dow.com) and Petrochemical Industries Company (PIC; and Kuwait City, Kuwait; www.pic.com.kw), a wholly owned subsidiary of Kuwait Petroleum Corp. (KPC; www.kpc.com.kw), today announced plans to form a 50/50 joint venture that will be a global petrochemicals company.
The joint venture (JV), to be headquartered in the United States, will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene, and polycarbonate. The JV is expected to have revenues of more than $11 billion (pro forma) and employ more than 5,000 people worldwide.
The new venture will build upon PIC’s feedstock position and commitment to global petrochemicals growth, KPC’s position as one of the world’s top-10 energy/hydrocarbons companies, and Dow’s technology and market leadership — including its number one position in polyethylene, ethyleneamines and ethanolamines. Dow reiterates that it will maintain its world-class security, environment, health and safety standards in the new venture. Further, it says, customers, in turn, will benefit from an even stronger supplier having feedstock integration, global supply chain, advanced technologies, resources to grow with customer demand, and an ongoing commitment to the future of the petrochemical industry.
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% 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% 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% interest.
“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.”
About the products in the venture
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. Polycarbonate is an engineering thermoplastic used in applications such as optical media, electrical and lighting. Amines are a family of chemicals with a broad range of properties, used in various applications from wood treating and pharmaceutical processing, to coatings and consumer products.