The Dow Chemical Company announced it 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.
EQUATE Petrochemical Company (EQUATE) was established in 1995 as Kuwait’s first international joint-venture in this industry. Partnership exists between Petrochemical Industries Company (PIC), The Dow Chemical Company (Dow), Boubyan Petrochemical Company (BPC), and Qurain Petrochemical Industries Company (QPIC).
The optimization is expected to occur in two phases:
Under the first phase, EQUATE would acquire MEGlobal for a total equity consideration of $3.2 billion. MEGlobal, established in 2004, is a joint venture between Dow and PIC. The transaction will result in Dow receiving $1.5 billion 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.
These transactions are subject to negotiation of definitive agreements and satisfaction of certain conditions, including obtaining and maintaining of certain customary regulatory approvals.
MEGlobal is a world leader in the manufacture and marketing of monoethylene glycol and diethylene glycol (EG). 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.
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. 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.