Dow awarded US$2.16 billion from Kuwait over aborted 2008 deal
Source: BI-ME with Bloomberg , Author: Posted by BI-ME staff
Posted: Thu May 24, 2012 8:30 pm

KUWAIT. Dow Chemical Co., the largest U.S. chemical maker by sales, said an arbitration panel ruled Kuwait must pay US$2.16 billion in damages because it canceled a 2008 agreement to buy a stake in the company's plastics business.
 
The award by the London-based International Court of Arbitration doesn't include costs or interest and is final and binding, Midland, Michigan-based Dow said today in a statement.

The timing of the payment and other terms of the agreement are confidential, Nancy Lamb, a Dow spokeswoman, said.
 
"Anything north of US$1 billion is a pleasant surprise," said Hassan Ahmed, a New York-based analyst at Alembic Global Advisors. "I don't think the market was giving Dow any credit for an imminent settlement."
 
Kuwait's Petrochemical Industries Co., under pressure from lawmakers, canceled a contract to form a 50-50 venture with Dow's plastics unit in December 2008.

The failure of the so- called K-Dow venture deprived Dow of a US$9 billion payment during the global financial crisis, almost derailed its 2009 purchase of Rohm & Haas Co. and forced the company's first dividend cut.

Dow rose 2.6% to US$31.30 at 10:57 a.m. in New York.

The award boosts Dow Chairman and Chief Executive Officer Andrew Liveris's credibility because he pursued compensation for the aborted deal, Ahmed, who recommends buying Dow shares, told Bloomberg in a telephone interview.
 
Dow may use the proceeds to refinance its higher interest debt or buy back preferred stock, Ahmed said. Dow sold US$3 billion of preferred shares yielding 8.5% a year to Warren Buffett's Berkshire Hathaway Inc. to help pay for Rohm & Haas. Lower interest costs would immediately boost earnings and Dow may also pay a special dividend, he said.
 
It's not yet clear how Dow will use the funds, Lamb said. The company is focused on using cash to reward shareholders, pay down debt and invest in growth projects, she said.
 
The company cut its quarterly dividend to 15 cents a share from 42 cents in February 2009 following the collapse of the K- Dow deal. Dow has since raised the payout to 32 cents a share.
 
Petrochemical Industries, a unit of state-owned Kuwait Petroleum Co., was to have paid US$7.5 billion for its stake in K- Dow, and the venture was to have paid each partnerUS US$1.5 billion.

Dow still has four joint ventures with Kuwait that predate K- Dow, including Equate Petrochemical Co. and MEGlobal BV, which make ethylene glycol, a chemical used in antifreeze and polyester.
 
"We remain focused on continuing to move forward with our transformation and profitable business partnerships -- both in Kuwait and around the world," Liveris said in the statement.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: May 5, 2015
UAE. JLL's Hotels & Hospitality Group has released its 2015 Middle East Hotel Intelligence Reports today for the key markets of Dubai, Abu Dhabi, Doha, Jeddah and Riyadh, at the Arabian Hotel Investment Conference (AHIC) in Dubai.
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UAE. Inbound announced deal value increased from US$0.4 billion in Q1 2014 to US$2.6 billion in Q1 2015; Q1 2015 announced MENA M&A deal value increases by 9% to US$8.9 billion; 69% of MENA executives expect the deal market to remain stable in 2015.
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UAE. Continued volatility seems to be the only certainty at the moment. Although it's hard to predict with any degree of certainty which way the charts will swing, the election polls remaining close does point towards investor sentiment weighing on the GBP.
UAE. Inbound announced deal value increased from US$0.4 billion in Q1 2014 to US$2.6 billion in Q1 2015; Q1 2015 announced MENA M&A deal value increases by 9% to US$8.9 billion; 69% of MENA executives expect the deal market to remain stable in 2015.
dhgate