K-Dow Petrochemicals
Encyclopedia
K-Dow Petrochemicals was to be a $17.4 billion joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

 between The Dow Chemical Company
Dow Chemical Company
The Dow Chemical Company is a multinational corporation headquartered in Midland, Michigan, United States. As of 2007, it is the second largest chemical manufacturer in the world by revenue and as of February 2009, the third-largest chemical company in the world by market capitalization .Dow...

 and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation
Kuwait Petroleum Corporation
Kuwait Petroleum Corporation is Kuwait's national oil company, headquartered in Kuwait City. It was founded on January 27, 1980 as an umbrella company, integrating KOC, KNPC, KOTC and PIC and effectively placing them under government control....

 (KPC).

Formation

K-Dow Petrochemicals was to be a multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...

 specializing in the manufacturing of plastics. It was an $11 billion joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

 between The Dow Chemical Company
Dow Chemical Company
The Dow Chemical Company is a multinational corporation headquartered in Midland, Michigan, United States. As of 2007, it is the second largest chemical manufacturer in the world by revenue and as of February 2009, the third-largest chemical company in the world by market capitalization .Dow...

 and Petrochemical Industries Company (PIC) of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum Corporation
Kuwait Petroleum Corporation
Kuwait Petroleum Corporation is Kuwait's national oil company, headquartered in Kuwait City. It was founded on January 27, 1980 as an umbrella company, integrating KOC, KNPC, KOTC and PIC and effectively placing them under government control....

 (KPC). On July 15, 2008 the two companies announced the location of their headquarters was to be in Southeast Michigan
Southeast Michigan
Southeast Michigan, also called Southeastern Michigan, is a region in the Lower Peninsula of the U.S. state of Michigan that is home to a majority of the state's businesses and industries as well as slightly over half of the state's population, most of whom are concentrated in Metro...

. In the third quarter 2008 earnings conference call Dow Chemical officials stated the K-Dow Joint Venture is on track to close by the end of the year. On December 1, 2008 the two companies announced they have signed a memorandum of understanding
Memorandum of understanding
A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in...

outlining agreed upon details about the Joint Venture. The transactions was expected to close on January 1, 2009 with K-Dow expected to be an instant leading global petrochemical supplier. Operations were expected to begin on that same date.

Breakup

Citing the global recession that begin in the later half of 2008, the Kuwaiti government scuttled the partnership prior to its launch on December 28, 2008.

Dow currently has arbitration pending against KPC. The original MOU had a damages clause that allowed for damaged up to $2.5 Billion. Dow Chemical has stated the damages they are seeking may be in excess of that amount.

Subsidiaries

As a part of the Joint-Venture formation two of Dow Chemical's current joint-ventures Kuwait Petroleum Corporation were to be transferred to K-Dow.
  • Equipolymers
  • MEGlobal

External links

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