DOW
Slight hope that K-Dow is not dead / Acquisition of Rohm and Haas still hanging in the balance
As Dow Chemical (Midland, Michigan / USA www.dow.com) struggles to rescue its asset light strategy after the last-minute collapse of its planned 50:50 joint venture K-Dow with Kuwait state-owned Petrochemical Industries Company (PIC, Sabahiya / Kuwait; www.pic.com.kw) – see Plasteurope.com of 07.01.2009 – it may hold some degree of hope that its intended partner has enough clout in the Middle East country to save the deal.
A letter dated 31 December 2008, two days after Kuwait’s Council of Ministers voted to cancel the deal, confirms that PIC was not to blame for the jv’s cancellation and suggests also that the deal is not dead, but simply postponed. In the letter, filed by Dow with the US Securities and Exchange Commission (SEC) and released on 6 January 2009, PIC’s chairwoman and managing director, Maha Abdul Rahman Mulla Hussain apologised to Dow for the evidently politically motivated scuttling of the jv plans. She stressed that “PIC remains committed to the transaction and is currently considering what can be done to persuade the government to reverse its decision.”
Although Kuwait’s oil minister Mohammad Al Olaim termed K-Dow defended the link with Dow as “strategically important,” reports say members of parliament opposed to foreign influence and apparently to the government in general joined forces to block the transaction. Whether industry support for the project will be able to turn the tide in Dow’s favour remains to be determined, however, as well as whether PIC will be obliged to pay the break-up fee demanded by Dow. In one recent US interview, Dow CEO Andrew Liveris suggested that the matter going to a jury trial might be “embarrassing for our partner.”
In any case, time is of the essence for the US chemical group which is trying to close its acquisition of Rohm and Haas (Philadelphia, Pennsylvania / USA; www.rohmhaas.com). In interviews, Liveris has stressed that the company will – initially, at least – ignore short-term financial constraints in favour of saving the asset light strategy. Implementing “plan B” and seeking a new partner for its petrochemicals and plastics businesses could take up to six months, he acknowledged. For Liveris, executing these alternatives is a “time frame issue.” If the “time frame goes worse,” he said headcount reductions, site closures and the slashing of capital spending budget will be accelerated.
If Dow fails to obtain all the regulatory approval needed to close the Rohm & Haas acquisition by 10 January 2009 – the European Commission gave thumbs up on 8 January, but clearance by the US. Federal Trade Commission is still out – the Philadelphia-based speciality chemicals producer can demand penalty payments of nearly USD 100m per month.
A letter dated 31 December 2008, two days after Kuwait’s Council of Ministers voted to cancel the deal, confirms that PIC was not to blame for the jv’s cancellation and suggests also that the deal is not dead, but simply postponed. In the letter, filed by Dow with the US Securities and Exchange Commission (SEC) and released on 6 January 2009, PIC’s chairwoman and managing director, Maha Abdul Rahman Mulla Hussain apologised to Dow for the evidently politically motivated scuttling of the jv plans. She stressed that “PIC remains committed to the transaction and is currently considering what can be done to persuade the government to reverse its decision.”
Although Kuwait’s oil minister Mohammad Al Olaim termed K-Dow defended the link with Dow as “strategically important,” reports say members of parliament opposed to foreign influence and apparently to the government in general joined forces to block the transaction. Whether industry support for the project will be able to turn the tide in Dow’s favour remains to be determined, however, as well as whether PIC will be obliged to pay the break-up fee demanded by Dow. In one recent US interview, Dow CEO Andrew Liveris suggested that the matter going to a jury trial might be “embarrassing for our partner.”
In any case, time is of the essence for the US chemical group which is trying to close its acquisition of Rohm and Haas (Philadelphia, Pennsylvania / USA; www.rohmhaas.com). In interviews, Liveris has stressed that the company will – initially, at least – ignore short-term financial constraints in favour of saving the asset light strategy. Implementing “plan B” and seeking a new partner for its petrochemicals and plastics businesses could take up to six months, he acknowledged. For Liveris, executing these alternatives is a “time frame issue.” If the “time frame goes worse,” he said headcount reductions, site closures and the slashing of capital spending budget will be accelerated.
If Dow fails to obtain all the regulatory approval needed to close the Rohm & Haas acquisition by 10 January 2009 – the European Commission gave thumbs up on 8 January, but clearance by the US. Federal Trade Commission is still out – the Philadelphia-based speciality chemicals producer can demand penalty payments of nearly USD 100m per month.
09.01.2009 Plasteurope.com [212575]
Published on 09.01.2009
German version of this article...