Dow Chemical Inc. CEO Andrew Liveris has often refuted the idea that his company is (or should be) a buyout candidate. Instead, Dow has put together an unprecedented string of joint ventures that combine its downstream assets with access to the pricey hydrocarbons that are its raw materials.

Thursday Dow announced what looks like its biggest JV yet, its third such deal with Petrochemical Industries of Kuwait, a unit of Kuwait Petroleum. Dow contributed five of its global businesses, valued at $19 billion, in exchange for $9.5 billion and half the new company. The move links the Middle Eastern company's energy supply with Dow's market reach. The joint venture creates a company based in the U.S. that will manufacture and sell polyethylene and other chemicals used in products ranging from plastic bottles, compact disks and computers to agricultural compounds. Overall, companies say the joint venture will have $11 billion in sales at its inception. The deal structure is similar to the 2004 deal between the two companies that created MEGlobal, which manufactures and markets ethylene glycol.

Dow is so committed to its JV strategy that it even put out a white paper on the topic in September. Meanwhile, rival chemical giant BASF AG of Germany continues with its strategy of trying to move closer to end-user markets, as it did with its 2006 acquisition of catalysts company Englehard in the U.S., which brought it closer to the auto business. CEO Juergen Hambrecht told reporters Thursday the company can spend up to $14.7 billion on acquisitions. — Gerald Magpily

See Dealscape Dec. 4 post
Reuters article on BASF
See the Bloomberg article
Our pervious post on Dow’s JVs

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