Dow Chemical (Midland, Michigan / USA; www.dow.com) has threatened to sue its long-term Kuwaiti business partner, the state-owned Petrochemical Industries Company (PIC, Sabahiya; www.pic.com.kw), for breach of contract over the collapse of the planned petrochemicals and plastics joint venture K-Dow. The deal was scuttled by the Kuwait Supreme Petroleum Council three days before it was scheduled to start up on 1 January 2009 – see Plasteurope.com of 05.01.2009. Analysts said the action was likely intended to force Kuwait to pay an agreed break-up fee of well over USD 2 bn.

The US chemical group, which has two existing joint ventures with PIC; said it would “seek to enforce its rights” under the terms of the various agreements and the joint venture formation agreement signed in December 2008. Kuwait’s pullout was “completely unexpected given the approvals already received and the behaviour, actions and words from our partners,” CEO Andrew Liveris said in a statement on 6 January.

Liveris said his group had more than 1,500 documents prepared for closing the deal. “Pursuing legal options is not a decision we take lightly, especially because of the longstanding partnerships we have established in Kuwait over the past decade,” but the company must protect its interests and those of its shareholders, he added. While prepared to close immediately if PIC changes its mind, the CEO said management “already been approached by other interested parties about joint venturing for the basic plastics businesses” in pursuit of its asset light strategy.

Prior to signing with PIC, Liveris said Dow “had other options and partners,” with some of the discussions active as recently as November 2008. He claimed that these alternatives, combined with the “acceleration of planned divestitures and several additional divestments,” would yield proceeds greater than the USD 9 bn in cash it expected to receive from K-Dow.

Dow needs the financial contribution from Kuwait to help stem the takeover of Rohm & Haas (Philadelphia, Pennsylvania / USA; www.rohmandhaas.com). Stock market watchers say a regulatory filing of September 2008 stipulates that the transaction must be completed by 10 January 2009 or the payout to the speciality chemicals producer will increase by about USD 100m a month until 10 July 2009. Regulatory approval was still outstanding on 6 January.