THE DOW CHEMICAL Company Chairman and CEO, Andrew Liveris, has said the recent decision by Dow’s partners in Kuwait to abandon the terms of its Joint Venture Formation Agreement (JVFA) will not deter the company from pursuing its strategy.
“While these events have been extremely disappointing and completely unexpected given where we were in the approval process, Dow is and will continue to be a strong, globally diverse company with a wide range of options available to us for delivering on our strategy," said Liveris.
"It is certainly true that the actions in Kuwait have accelerated the need for decisive action but our strategy remains as relevant as ever and will drive the choices we make to become a company that will thrive in the changing markets of the 21st century.” On December 31, 2008, Dow received official written notice from Petrochemical ) Dow Chemical to 'pursue legal action against PIC' Industries Company (PIC) of Kuwait that the closing must be postponed because the Kuwaiti Supreme Petroleum Council withdrew its earlier approval of the transaction. As a result, Dow has said it will seek to enforce its rights under the terms of the various agreements and the JVFA executed by Dow and PIC since the joint venture partnership was first announced in December 2007.
“We were shocked by this news, and this was completely unexpected given the approvals already received and the behaviour, actions and words from our partners. We have over 1,500 documents prepared for closing for what we believed to be Day 1 of KDow Petrochemicals on January 2,” said Liveris.
“Pursuing legal options is not a decision we take lightly, especially because of the longstanding partnerships we have established in Kuwait over the past decade, but PIC is in breach of contract, and we must take action to protect the interests of our company and our shareholders.” Although Dow is prepared to close KDow immediately if PIC does indeed cure the breach of contract, the company has already been approached by other interested parties about joint venturing with Dow for the basic plastics businesses. As a result, Dow has also announced it will establish a formal process to secure a joint venture partner to accomplish the goals of its asset light strategy. The core businesses involved in the KDow joint venture include Dow franchise businesses, among them the largest and strongest producer of polyethylene in the world. Polyethylene is the world’s largest thermoplastic and for several decades has grown well above global GDP.