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MIDLAND, Mich., and KUWAIT CITY, Kuwait/PRNewswire-FirstCall/ -- The Dow Chemical Company (NYSE:DOW) and Petrochemical Industries Company, a wholly owned subsidiary of Kuwait Petroleum Corporation, announced they have signed an agreement to form K-Dow Petrochemicals, a 50:50 joint venture that will be the leading global supplier of petrochemicals and plastics.
It is expected that the new company will begin operations no later than January 1, 2009, with closing on that date as articulated in the December 13, 2007 MOU announcement.
K-Dow will be a leading global supplier of essential petrochemicals and plastics and will manufacture and market polyethylene, ethyleneamines, ethanolamines, polypropylene and polycarbonate, and will also license polypropylene technology and market related catalysts.
"The signing of these documents is the critical step in the formation of K-Dow, which will immediately become a leading petrochemicals supplier globally," said Andrew N. Liveris, Dow chairman and chief executive officer. "The formation of K-Dow Petrochemicals will be a critical milestone in Dow's transformation into an earnings growth company.”
The total enterprise value of the Dow businesses going into K-Dow is approximately $17.4 billion. This equates to $8.72 billion for each shareholder. The final proceeds of the transaction include usual adjustments of $1.2 billion, related to working capital and net debt.
Upon closing of the transaction, each shareholder plans to receive a $1.5 billion special cash distribution, paid by K-Dow.
The gross payment by PIC is expected to be approximately $7.5 billion, with the net payment of $6 billion, including the special cash distribution from K-Dow.
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Dow expects to receive $9 billion in total pre-tax proceeds related to the transaction. These proceeds include the special cash distribution from K-Dow of $1.5 billion.
With annual sales of $54 billion and 46,000 employees worldwide, Dow is a diversified chemical company that combines the power of science and technology with the "Human Element" to constantly improve what is essential to human progress. The Company delivers a broad range of products and services to customers in around 160 countries, connecting chemistry and innovation with the principles of sustainability to help provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. For more information on the company visit http://www.dow.com.
As part of the Kuwait Petroleum Corporation family, PIC is at the heart of the national strategy to maximize the value of Kuwait's hydrocarbon resources, and is focused on increasing its petrochemical contributions. It is focused on strategic growth inside and outside Kuwait through diversification, further use of strategic alliances, as well as pursuing successful joint ventures such as EQUATE, GPIC and TKOC. More information is available at http://www.pic.com.kw.
