Kuwait backs out of Dow deal
Entrance to a Dow Chemical Company plant in Torrance, Calif
TEXT OF STORY
Scott Jagow: The big drop in oil prices the second half of this year -- certainly welcomed. Well, not by everybody. Dow Chemical was supposed to close a deal this week with Kuwait -- a $17 billion joint venture. But last night, Kuwait backed out of it. Marketplace's Steve Henn is following that story.
Steve Henn: Dow executives have been scheming for years to move away from manufacturing low-margin commodities to specialty chemicals. A big part of their plan was to purchase Rohm & Haas.
But Rohm & Haas, which makes electronic coatings, isn't cheap, costing more than $15 billion. Earlier this month, Dow laid off thousands of employees, in part to free up cash to close the deal. And Dow had been hoping to use billions dollars from selling a share of some of its chemical plants to Kuwait to finance the rest.
But yesterday, the Kuwaitis called and said, sorry. As oil and natural gas prices plummeted, the joint venture with Dow Chemical became less and less attractive.
Without the Kuwaitis' cash, its unclear how Dow will finance its future plans. And if Dow can't come up with something quick, it will have to pay Rohm & Haas a $750 million cancellation fee.
In Washington, I'm Steve Henn for Marketplace.