December 28, 2008
by Senior Advisor, John Dietz
The recession in the United States is not complete with its global impact.  In spite of Kuwait’s richness in oil, it still feels the crunch of the Wall Street credit dilemma.
A joint venture between Dow Chemical and Kuwait (KPC – Kuwait Petroleum Corporation), which was to be called K-Dow was cancelled due to the falling value of assets on the balance sheet of Dow Chemical.  The stock price of Dow Chemical has more then dropped in half
Dow, the largest chemical company in the US, expected a deal slated for $17.4 billion USD.  It was cancelled under pressure from the parliament of Kuwait just days before the influx of capital.
Dow Chemical was to receive about 9 billion USD from KPC (which was a discounted price) for a fifty percent stake in its commodity chemicals business.  The Kuwait deal was intended to help Dow raise cash to invest in a planned $15 billion takeover of Rohm & Haas, which is a specialty chemicals group (NYSE ROH) out of Philadelphia Pennsylvania.  On July 10, 2008, Dow Chemical agreed to buy Rohm and Haas for $17.29 billion dollars.
Rohm & Haas have not commented or speculated publically on what damage the fall out may cause.  Rohm & Haas employs over 17,000 people in 27 different countries. Dow Chemical has announced plans to cut eleven percent of its workforce  (5,000 jobs) and close 20 facilities.
In a statement, Dow Chemical said it was “extremely disappointed” with the Kuwait decision.