DOW / UNION CARBIDE
EU approves merger with restrictions / Sale of PE resins capacity and technology mandated
The European Commission (EC) has cleared the merger of US chemical and plastics groups Dow Chemical (HQ: Midland, Michigan, USA) and Union Carbide (UCC, Danbury, CT, USA) subject to restrictions. The US Federal Trade Commission (FTC) also has to approve the deal – which is actually an acquisition by Dow of its US competitor – so that additional strings could be attached. One of the most significant EU restrictions is a requirement that UCC either divest its 50% share in Polimeri, the PE joint venture with Italy´s Enichem, or “cause Polimeri to sell its Italian production plant for C8 LLDPE.”
The Commission said it was concerned that the merger could curb competition in PE resins (especially C8 LLDPE) and PE technology, as well as the chemical intermediate ethyleneamine. Dow has agreed to divest the ethyleneamine activities. According to the EU competition authority, Dow already has a “significant share” of the western European market for C8 LLDPE and UCC´s contribution of its Polimeri stake would give the Dow-Carbide linkup a combined market share in excess of 80% for C8 LLDPE, five times that of its nearest competitor.
In PE technology, Dow will sell to BP Amoco its metallocene catalyst knowhow dedicated to gas phase processes, including ownership rights to the technology developed in cooperation with BP – and must grant it a licence to use its background metallocene patents and certain research assets. Dow also is to grant licenses to third parties for its gas phase or slurry metallocene PE processes. Adding Dow´s metallocene technology to UCC´s “Unipol” gas-phase process marketed by Univation would have weakened BP-Amoco´s position, the Commission said.
Meanwhile, two US law firms have filed suit to block the Dow-UCC deal on grounds that shareholders may still face damage payments stemming from the UCC Bhopal disaster in 1984. The suit says Dow violated US security laws and made false statements or omissions regarding potential liabilities taken over with Union Carbide that could cost the company “billions of dollars.” Along with the cost aspect, still unsettled Bhopal questions could jeopardise Dow´s expansion plans for India, the suit charges.
The Commission said it was concerned that the merger could curb competition in PE resins (especially C8 LLDPE) and PE technology, as well as the chemical intermediate ethyleneamine. Dow has agreed to divest the ethyleneamine activities. According to the EU competition authority, Dow already has a “significant share” of the western European market for C8 LLDPE and UCC´s contribution of its Polimeri stake would give the Dow-Carbide linkup a combined market share in excess of 80% for C8 LLDPE, five times that of its nearest competitor.
In PE technology, Dow will sell to BP Amoco its metallocene catalyst knowhow dedicated to gas phase processes, including ownership rights to the technology developed in cooperation with BP – and must grant it a licence to use its background metallocene patents and certain research assets. Dow also is to grant licenses to third parties for its gas phase or slurry metallocene PE processes. Adding Dow´s metallocene technology to UCC´s “Unipol” gas-phase process marketed by Univation would have weakened BP-Amoco´s position, the Commission said.
Meanwhile, two US law firms have filed suit to block the Dow-UCC deal on grounds that shareholders may still face damage payments stemming from the UCC Bhopal disaster in 1984. The suit says Dow violated US security laws and made false statements or omissions regarding potential liabilities taken over with Union Carbide that could cost the company “billions of dollars.” Along with the cost aspect, still unsettled Bhopal questions could jeopardise Dow´s expansion plans for India, the suit charges.
15.05.2000 Plasteurope.com [17380]
Published on 15.05.2000