The path is clear for K-Dow, the new joint venture between Dow Chemical (Midland, Michigan / USA; www.dow.com) and Kuwait’s Petrochemical Industries Company (PIC, Sabahiya; www.pic.com.kw), to start up on 1 January 2009 – see Plasteurope.com of 17.12.2007. The final agreement announced on 1 December 2008 will net Dow USD 500m less than previously expected. Recent speculation had suggested the transaction might be renegotiated in light of Dow’s reduced share price (see Plasteurope.com of 27.11.2008). In view of the economic meltdown, it was natural to revisit the deal, Dow CEO Andrew Liveris said in a conference call.

Altogether, the enterprise value of the businesses to be included in K-Dow totals USD 17.4 bn (down from the USD 19 bn estimated in December 2007). According to the latest agreement, PIC will pay Dow USD 7.5 bn for its share and each of the partners will receive USD 1.5 bn in cash back from the new joint venture. Dow plans to use some of the proceeds from the deal with Kuwait to fund its planned USD 15.4 bn acquisition of Rohm and Haas (see Plasteurope.com of 15.07.2008).

K-Dow is planned to be based in the US state of Michigan. Local news reports say a location is expected to be announced shortly. Dow is said to be seeking a tax credit from the state economic growth board, which will hold its last meeting of 2008 on 16 December. The jv will produce PE, ethylene and amines, as well as PP and polycarbonate. It also will market PP technology and related catalysts.

As expected, Dow’s two existing jvs with Kuwait, MEGlobal (ethylene glycol) and Equipolymers (PET) will be part of K-Dow, bringing total annual turnover to USD 15 bn. Analysts said the inclusion of the two older partnerships will reduce the new company’s debt burden.