Sure, chemical company joint ventures might not suggest mind-blowing excitement. But after you take a look at the collaboration between Dow Chemical
The venture, dubbed K-Dow Petrochemicals, will have equal ownership for Dow and the Kuwait national company. But due to the currently declining world economic picture, Dow has agreed take $9 billion for its contribution of 15 production facilities located throughout the Americas and Europe. That's $500 million less than what Dow had originally hoped to get in the deal.
Of the $9 billion, Dow will get $7.5 billion directly from Kuwait Petroleum, with $1.5 billion coming from loans the venture will obtain. Dow will use its take from the deal to partially fund its $15.3 billion purchase of Rohm & Haas
Like lots of businesses, the chemicals sector has been struggling of late. DuPont's
In addition, Germany's big chemicals producer, BASF (OTC BB: BASFY.PK), is temporarily closing 80 plants globally and cutting its production by about a quarter. On the other hand, it appears that BASF will acquire Swiss chemicals maker Ciba Holding (OTC BB: CSBHY.PK).
As far as Dow's concerned, it's unlikely that its chemicals business will turn before we've moved well into 2009 -- at the very soonest. Nevertheless, it appears that, in the K-Dow venture and the Rohm & Haas acquisition, Dow CEO Andrew Liveris is positioning the company solidly for the day when we begin to see the first glimmer of an economic spring. For that reason alone, I'd suggest keeping Dow Chemical carefully targeted on your radar screen.
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