The Dow Chemical Company (Midland, Mich.; www.dow.com) has announced a two-phase restructuring plan with the objective of optimizing its participation in various Kuwaiti joint ventures. Under the first phase, EQUATE would acquire MEGlobal, a joint venture between Dow and Petrochemical Industries Company (PIC) of Kuwait, for a total equity consideration of $3.2 billion. MEGlobal is a world leader in the manufacture and marketing of monoethylene glycol and diethylene glycol (EG), and is headquartered in Dubai, UAE. The transaction will result in Dow receiving $1.5 billion in pre-tax proceeds. Following completion of this acquisition, which is expected to close by year-end 2015, Dow will retain a 42.5% ownership stake in MEGlobal through its ownership of Greater EQUATE. This acquisition is also expected to drive efficiencies and cost savings due to existing synergies between MEGlobal and EQUATE.
In the second phase, Dow and PIC have agreed that Dow will further reduce its overall ownership interest in Greater EQUATE. The target to complete this second phase of the transaction is mid-2016.
In a related move, MEGlobal will build an MEG plant on the U.S. Gulf Coast – enabling MEGlobal and its parent companies to enjoy growth in a highly strategic region of the world and drive significant expansion of MEGlobal’s geographic footprint and capacity. Final location of the asset is contingent upon pending incentives.
“This announcement demonstrates Dow’s commitment to evaluate our joint venture portfolio to unlock value for shareholders and simultaneously expand our relationship with a key strategic partner,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “This transaction allows Dow to maximize shareholder value, while maintaining our commitment to these industry-leading joint ventures.”