When Dow Chemical Co.'s planned $19 billion joint venture with Kuwait's Petrochemical Industries Co. failed on Sunday, it cast doubt on the chemical giant's other blockbuster deal: its $18.8 billion acquisition of Rohm and Haas Co. Why? Because as The Deal's
Kenneth Klee noted in early December, the proceeds from the first deal will be used to help fund the second.
Dow and Petrochemical are partners in several other JVs, but the Kuwaiti firm pulled out of the latest venture -- in which it would have acquired half of Dow's polyethylene and polypropylene business -- in part because of falling oil prices. The deal was announced a year ago, when oil prices were soaring.
As The Deal's Peter Moreira reports, the Rohm and Haas deal, announced in July, is not contingent on the Kuwait JV, but the cancellation will make it more difficult for Dow to pay down a bridge loan it had been planning to help finance the transaction.
Dow CEO Andrew Liveris was quoted by Bloomberg as saying the JV was a "
phenomenal deal in very miserable economic conditions." It seems the stormy environment is proving extremely difficult to navigate.
- Suzanne Stevens
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