MIDLAND, MI and THE WOODLANDS, TX (April 10, 2007) - The Dow Chemical Company (Dow) and Chevron Phillips Chemical Company LP (Chevron Phillips Chemical) have signed a non-binding Memorandum of Understanding relating to the formation of a joint venture involving assets from their polystyrene and styrene monomer businesses in the Americas. The new venture is subject to customary regulatory review, due diligence, completion of definitive agreements, and corporate and other approvals. Upon the necessary approvals, the parties would expect the transaction to close in the second half of 2007.
"Today's announcement marks another key milestone in Dow's strategic agenda and underscores our commitment to change the Company's long-term earnings profile," said Andrew Liveris, Dow chairman and chief executive officer. "This joint venture is what our Asset Light strategy is all about: joining forces with a complementary partner who brings value to Dow through its excellent feedstock position and with whom we can build a stronger regional presence, reduce costs, enhance innovation and deliver a superior service to our customers."
The 50-50 joint venture is expected to establish the competitive model for an integrated producer of polystyrene in the Americas.
"This joint venture is an important step for our company in recognizing the changing competitive landscape for styrenics in the Americas," said Ray Wilcox, president and chief executive officer of Chevron Phillips Chemical. "This is a very competitive business and we look forward to achieving the synergies of this venture so as to expand our opportunities in the Americas and more efficiently meet customer demand."
The potential joint venture is expected to realize significant manufacturing, commercial and feedstock synergies between Dow and Chevron Phillips Chemical.
"We complement each other well and together we're creating a sustainable company in the Americas," said Mike Gambrell, Dow Executive Vice President for Basic Plastics and Chemicals. "Both companies bring a wealth of commercial and manufacturing experience to the venture."
"Partnering in this way enables both Chevron Phillips Chemical and Dow to more efficiently build upon our core competencies," said Mike Parker, senior vice president of aromatics and styrenics for Chevron Phillips Chemical. "We also believe it improves our customer coverage and enhances logistics to better serve them."
Subject to due diligence, the parties intend to contribute the following assets to the venture. Dow intends to contribute: a styrene monomer plant (Camacari, Brazil) and six polystyrene plants (Gales Ferry, Connecticut; Ironton, Ohio; Joliet, Illinois; Torrance, California; Cartagena, Colombia; and Guaruja, Brazil). Chevron Phillips Chemical intends to contribute a styrene monomer plant (St. James, Louisiana) and a polystyrene plant (Marietta, Ohio).
About Dow
Dow is a diversified chemical company that harnesses the power of innovation, science and technology to constantly improve what is essential to human progress. The Company offers a broad range of products and services to customers in more than 175 countries, helping them to provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. Built on a commitment to its principles of sustainability, Dow has annual sales of $49 billion and employs 43,000 people worldwide. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at http://www.dow.com/.
About Chevron Phillips Chemical
With approximately $7 billion in assets and over $12 billion in revenues in 2006, Chevron Phillips Chemical Company LLC with its affiliates is one of the world's top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping and proprietary plastics. The company produces chemicals that are essential to manufacturing over 70,000 consumer and industrial products. Headquartered in The Woodlands, Texas, the company has more than 5,000 employees worldwide. For more information about Chevron Phillips Chemical, go to http://www.cpchem.com/.
Some of the matters discussed in this news release are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially from those described, as a result of factors including, but not limited to, future economic conditions, industry production capacity and operating rates, the supply/demand balance for the products discussed in this release, pricing pressures, increases in raw material and/or energy costs, changes in governmental regulations, political risks, war, civil unrest, and other factors. These statements are not guarantees of future performance and actual outcomes and results may differ, perhaps materially, from those described herein.