Dow plans to restructure participation in Kuwaiti Joint Ventures

The Dow Chemical Company intends to restructure its participation in its group of Kuwaiti Joint Ventures with the objective of optimizing its investment and expanding its relationship with Greater EQUATE on the U.S. Gulf Coast. This announcement aligns with Dow’s prior stated commitments to optimize its investments in certain joint ventures. The optimization is expected to occur in two phases. Under the first phase, EQUATE would acquire MEGlobal for a total equity consideration of US$3.2 bln. The transaction will result in Dow receiving US$1.5 bln 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.” MEGlobal is a world leader in the manufacture and marketing of monoethylene glycol and diethylene glycol (EG), and is headquartered in Dubai, UAE. Established in July 2004, MEGlobal currently markets over 2.5 million metric tons of EG per year globally. EG is used as a raw material in the manufacture of polyester fibers (clothing and other textiles), polyethylene terephthalate (PET) resins, antifreeze formulations and other industrial products. MEGlobal is a joint venture between Dow and Petrochemical Industries Company (PIC) of Kuwait. Established in 1995, EQUATE is the operator of an integrated world-scale manufacturing facility producing more than 5 million tons annually of high-quality petrochemical products, including polyethylene, ethylene, and EG, that are marketed throughout the Middle East, Asia, Africa and Europe. Formed in 2004, The Kuwait Olefins Company (TKOC) is an international joint venture among Dow, Petrochemical Industries Company (PIC), Boubyan Petrochemical Company (BPC) and Qurain Petrochemical Industries Company (QPIC). EQUATE is the single operator of Greater EQUATE, which includes TKOC, The Kuwait Styrene Company (TKSC), and Kuwait Paraxylene Production Company (KPPC) under one fully integrated operational umbrella at Kuwait’s Shuaiba Industrial Area. These transactions are subject to negotiation of definitive agreements and satisfaction of certain conditions, including obtaining and maintaining of certain customary regulatory approvals.