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.
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 billion. The transaction will result in Dow receiving US$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.
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.”
These transactions are subject to negotiation of definitive agreements and satisfaction of certain conditions, including obtaining and maintaining of certain customary regulatory approvals.