Dow and PIC Sign Venture Memorandum of Agreement Charlyn Finn  |  15-Dec-2007 Dow and PIC sign joint venture moa Tuesday, December 18, 2007 12:36 PM CST By CHARLYN FINN - Dow and PIC of Kuwait have signed a memorandum of agreement for a joint venture that would impact the Seadrift Dow Plant. “Four of the 12 Seadrift units will be impacted,” said David Pankratz of the Seadrift Dow Operations. “Four of the 12 units will become part of the joint venture. The joint venture will focus on investment in technology. The four units will likely be under a new name. It would be a new industry for Seadrift. The four units are being expanded and renovated as we speak.” Currently polyethylene plastics are produced in the units. The Dow Chemical Company (Dow) and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), announced Thursday after a morning meeting plans to form a 50/50 joint venture. The JV 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. “For Dow, this marks an important milestone in our transformational strategy: growing our Basics businesses through joint ventures; reducing our capital intensity; and, freeing up cash to invest in our portfolio of Performance and Market Facing businesses.” The 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. “Through this joint venture, KPC enters a new arena of specialty products based on leading global technologies,” said Saad Al-Shuwaib, CEO of Kuwait Petroleum Corporation. “The JV will enable PIC to expand and diversify its international petrochemicals presence, while building on our long-standing relationship with Dow. By selectively investing in downstream petrochemical businesses, we are maximizing the value of Kuwait’s hydrocarbons resources while diversifying our national economy and increasing job opportunities.” 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 JV, 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 JV 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.”