Dow Chemical’s $9 Billion Kuwait Venture Canceled by Government

From the article: “They said the investment was too large at a time of falling oil prices.”

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Lindsey Williams: The Dollar And The US Will Collapse; Saudi Arabia And Dubai Will Fall; US Will Be Third World Country; The Greatest Depression Is Coming

Dec. 28 (Bloomberg) — Kuwait canceled a $9 billion joint venture with Dow Chemical Co., the biggest U.S. chemical company, following weeks of opposition from lawmakers.

Scrapping the Dow venture with Kuwait’s Petrochemical Industries Co. may leave the U.S. company short of cash it planned to spend on the $15.4 billion acquisition of Rohm & Haas Co. The Kuwaiti government was been under pressure from opposition lawmakers to scrap the deal, which they said was overpriced and came at the wrong time.

“Dow is extremely disappointed with the decision by the Kuwait Government and is in the process of evaluating its options pursuant to the Joint Venture Formation Agreement,” the Midland, Michigan-based company said in a statement. It added that “Dow remains committed to its Middle East Strategy.”

Forming K-Dow, as the venture was named, was a key part of Chief Executive Officer Andrew Liveris’s plan to reduce Dow’s reliance on commodity products and gain access to lower-cost petroleum, used to make chemicals.

State-owned Petrochemical Industries was to pay $7.5 billion for a 50 percent stake in Dow’s basic plastics business, $3.5 billion less than announced a year ago, according to an earlier statement from Dow.

Kuwait’s Cabinet “decided to cancel the contract and asked all concerned authorities to take the necessary measures to implement this decision,” KUNA, the state news agency, reported from Kuwait today, citing a Cabinet statement.

Some members of Kuwait’s parliament threatened public questioning of Prime Minister Sheikh Nasser al-Mohammed al- Sabah, a nephew of Emir Sheikh Sabah al-Ahmed al-Sabah, Kuwait’s ruler. They said the investment was too large at a time of falling oil prices.

New York crude closed last week below $38 a barrel, compared with a record $147.27 in July.

To contact the reporter on this story: Fiona MacDonald in Kuwait at [email protected]

Last Updated: December 28, 2008 14:32 EST
By Jack Kaskey and Fiona MacDonald

Source: Bloomberg

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