Dow-PIC contract abandonment may hinder Rohm & Haas take-over

02-Jan-09
Kuwait's abandonment of the massive US$17.4 bln Dow - PIC (Petrochemical Industries Company) joint venture shortly ahead of its proposed Jan 1 start-up might jeopardize Dow's planned acquisition of Rohm & Haas for US$15.3 bln. As a part of the JV agreement, PIC was to pay US$7.5 bln to the American chemical maker. Nevertheless, Dow can claim a contract cancellation fee of US$2.5 bln from the Kuwaiti company only if it proves in court that Kuwait broke the terms of contract. Given Dow's Middle East growth strategy, it is difficult to say whether the American company would legally act against the short-notice reversal of this massive contract. Dow's take-over of Rohm & Haas will extend the company's portfolio adding specialty chemicals, which analyst believe to be a daunting task given the recent turn of events.
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