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Dow to sell part of its MEGlobal stake to Equate
Oct '15
Dow Chemical Company has announced that it would sell a part of its ownership stake in MEGlobal – a joint venture between Dow and the Kuwait based Petrochemical Industries Company – to Equate.
With the objective of optimising its investment and expanding its relationship with Greater Equate on the US Gulf Coast, Dow intends to restructure its participation in its group of Kuwaiti Joint Ventures, the company said in a press release.
The optimisation is expected to occur in two phases. Under the first phase, Equate would acquire MEGlobal for a total equity consideration of $3.2 billion. 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 per cent 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 will further reduce its overall ownership interest in Greater Equate. The target to complete this second phase of the transaction is mid-2016.
“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 maximise shareholder value, while maintaining our commitment to these industry-leading joint ventures.”
Meanwhile, leveraging the benefits of the shale gas availability, MEGlobal will build an MEG plant on the US Gulf Coast. It will enable 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.”
However, the final location of the asset is contingent upon pending incentives, the statement said.
Established in July 2004 with its headquarters in Dubai, UAE, 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 fibres (clothing and other textiles), polyethylene terephthalate (PET) resins, anti-freeze formulations and other industrial products. (RKS)

Fibre2Fashion News Desk – India

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