Is Dow Chemical (NYSE:DOW) ready for more bad news? Ready or not, here it is: A $22 billion joint venture between Dow and the Saudi Arabian Oil Co. is beginning to look shaky. This comes hot on the heels of the unraveling of a $17.4 billion joint venture that the company was heading into with Kuwait Petroleum Corp.

The Kuwaitis pulled the plug on K-Dow Petrochemicals after deciding that the financial crisis and flip-flopping oil prices rendered the deal unwise. That was bad enough on its own, but it also endangered Dow's plans to acquire Rohm & Haas (NYSE:ROH).

The $9 billion that Dow would have received for contributing 15 of its production facilities in the Kuwait deal would have gone a long way toward the planned $15.3 billion acquisition. Both deals would have helped Dow increase its presence in higher-margin specialty chemicals. The giant based in Midland, Mich., manufactures mostly commodity chemicals.

With things all askew it appears Dow will be forced to tap its financing facility to complete its Rohm & Haas purchase -- should it decide to do so. The Rohm & Haas transaction was agreed to without a "buyer's remorse" clause, which would have permitted Dow to exit with the payment of a penalty. Now, however, it's questionable how easily it could walk away from its agreement to pay $78 for each Rohm & Haas share. Shareholders aren't expecting much, right now -- the company's shares closed at $59.70 yesterday.

Meanwhile, Dow has reaffirmed its involvement in the Saudi project, which would involve the construction of a huge new petrochemical facility on the Persian Gulf. But the company has seen firsthand how conditions outside its control can squelch plans.

All this comes at a time of mounting difficulty for the global chemicals industry. Netherlands-based LyondellBasell Industries appears to be considering bankruptcy. Delaware-based DuPont (NYSE:DD) has seen its fortunes erode. Germany's BASF (OTC BB: BASFY) announced earlier this month it would close dozens of plants. Although BASF is nevertheless in the process of buying Swiss chemicals maker Ciba (OTC BB: CSBHY).

So how should Foolish investors approach Dow? While I'm reluctant to run counter to the proven wisdom of Motley Fool CAPS players, I'm going to make an exception here. Dow Chemical has been awarded five stars, but I simply see too much confusion having built up at the company. Let's give Dow a rest for now.  

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