Dow Chemical to pursue legal action against Kuwait's PIC.
Dow Chemical Co will take legal action against Petrochemical Industries Co (PIC) of Kuwait and is seeking more than $2.5 billion in damages from the Kuwaitis for backing out of a joint venture agreement, the largest US chemical maker said.
Dow is considering new partners for the proposed joint venture and has already been approached by two companies interested in its basic plastics business, chief executive Andrew Liveris told Reuters in a telephone interview. Last month, Kuwait decided to scrap a deal to form a $17.4 billion petrochemical joint venture with Dow, potentially upsetting Dow's plans to buy rival Rohm & Haas Co. Dow had planned to use proceeds from the joint venture to repay a large part of the debt financing for the $15.3 billion Rohm & Haas acquisition. Under the joint venture agreement, Pic was to pay Dow $7.5 billion. Liveris declined to comment on whether Dow would consider renegotiating the Rohm and Haas deal or would consider pulling out of it. "Rohm and Haas is on strategy and is in the regulatory approval process," said Liveris. Shares of Dow were up in trade on the New York Stock Exchange following the company's statement that it plans to pursue legal action against the state-run Kuwaiti firm. Liveris said Dow has no plans to lower its dividend, now 42 cents per share quarterly, despite the tough global economic conditions and the breakdown of the joint venture agreement. Dow and other chemical companies are struggling because of recession in most developed countries and a sharp slowdown in emerging economies. The company said last month it would close 20 facilities, divest several businesses and cut 5,000 jobs to cope with the slump.
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