December 28. 2008

Kuwait scraps $17bn deal with Dow @@

Kuwait has cancelled a US$17.4 billion (Dh63.9bn) deal to create a petrochemical joint venture with the US company Dow Chemical.

The controversial deal, which had run into stiff opposition from members of Kuwait
fs parliament, was scrapped because it was unfeasible under the current economic conditions, the state news agency Kuna said late yesterday.

The decision to cancel the deal - among the biggest in the global petrochemicals industry in recent years - was taken at an extraordinary meeting of the Cabinet, Al Watan TV, a local television station, reported.

The private station cited the global economic crisis and its impact on the Opec oil producer, which no longer saw an economic benefit from the proposed joint venture, as reasons for the decision.

Under an agreement signed last month and approved by Kuwait
fs Supreme Petroleum Council, Kuwaiti state-owned Petrochemicals Industries was to pay Dow - the biggest US chemicals producer - $7.5bn for a 50 per cent stake in a joint venture company to be called K-Dow Petrochemicals. The deal was to take effect on Thursday.
The transaction was especially significant for Dow, as it planned to use the proceeds to repay a large part of the $13bn debt it stands to shoulder once its acquisition of the US specialty chemicals maker, Rohm and Haas, closes early next year.

But the K-Dow Petrochemicals agreement had angered deputies of Kuwait
fs liberal Popular Action Bloc, who had threatened to question the countryfs prime minister, Sheikh Nasser al Mohammed al Sabah, unless the deal was scrapped before a Jan 1 deadline. The Kuwaiti partner would have been liable to pay a penalty of up to $2.5bn if it decided to walk away from the project after that date.
Nonetheless, the move caught industry experts off guard.

Pat Rooney, the Middle East managing director of CMAI, a global chemicals consultancy, said he was
g90 per cent sureh the deal would go through. gMy understanding is the deal was cut with all the relevant authorities,h he said.

The decision could also have repercussions for future investment in Kuwait
fs key oil and petrochemicals sectors.

gClearly it would make a foreign investor nervous,h Mr Rooney said. gCertainly, it seems to me to be an opportunity lost for the Kuwaitis.h
Dow officials could not be reached for comment yesterday.

Worried about the growing criticism of the deal, Dow issued a statement last week saying K-Dow was
gin the long-term interest of the people of Kuwaith.
Earlier in the week the oil minister, Mohammad al Olaim, said the government was
ggoing ahead with the deal based on the signed agreementh.

Experts agree that the chemicals industry is in the midst of a downturn cause by falling demand, and predict capacity will grow sharply in the next several years, led by expansions in the Gulf.

The poor prospects facing the industry would have bolstered the opposition
fs case against the venture, said Michael Corke, a vice president at the energy consultant, Purvin and Gertz.

gItfs not surprising that the present situation would give the doubters extra ammunition,h he said. gItfs very difficult when looking forward to avoid being completely overwhelmed with whatfs happening today.h

The petrochemical dealfs cancellation was also symptomatic of long-standing political turmoil in Kuwait.

Mr Rooney said the failure of the deal was part of a larger conflict within Kuwait
fs political system.

Last month, a move to question the prime minister on another issue prompted the government to resign. But Kuwait
fs ruler reappointed his nephew, Sheikh Nasser, as prime minister.

fs parliament has long struggled with the government for control of the oil and gas sector.



Kuwait Scraps Dow Chemical Venture, Imperiling Rohm & Haas Deal

Kuwait canceled the purchase of a 50 percent stake in Dow Chemical Co.fs plastics making unit, depriving Dow of $9 billion it planned to use for the acquisition of Rohm & Haas Co.

Kuwaitfs Supreme Petroleum Council reversed last monthfs decision to approve the venture, to be called K-Dow Petrochemicals, the Midland, Michigan-based company said today in a statement.

K-Dow was a key part of Chief Executive Officer Andrew Liverisfs plan to reduce Dowfs reliance on commodity products and gain access to lower-cost petroleum, used to make chemicals. Dow now might have trouble raising the full $18 billion needed to complete its purchase of Rohm & Haas, said Sean Egan, managing director of Egan-Jones Ratings Co.

gIt is doubtful that Dow will be able to easily raise the funds and might opt to pay a cancellation fee,h Egan said in an e-mailed report. Dow would pay $750 million if it terminates the acquisition, Rohm & Haas said in a Sept. 29 regulatory filing.

Brian McPeak, a Rohm & Haas spokesman, didnft immediately return messages left outside regular business hours. Dave Winder, a spokesman for Dow, also didnft return calls.

Dow in July agreed to buy Rohm & Haas, a maker of materials used in paints and electronics, for $15.4 billion and assume $3.4 billion of debt. Dow would be able to complete the Rohm & Haas transaction even without the Kuwaiti money, Liveris said when the deal was announced.

Dow plans to fund the Rohm & Haas purchase with a $13 billion bridge loan, a $3 billion equity investment by Warren Buffettfs Berkshire Hathaway Inc. and a $1 billion investment by the Kuwait Investment Authority. Dow would need only about $5 billion of the bridge loan with the Kuwait proceeds, Chief Financial Officer Geoffery Merszei said Oct. 23 on a conference call.

Plants, Technology

Kuwaitfs state-owned Petrochemical Industries Co. was to pay $7.5 billion for a 50 percent stake in Dow plants and technology used to make commodity plastics and other products. The venture would pay each partner $1.5 billion, boosting Dowfs net proceeds to $9 billion and reducing Petrochemical Industriesf net cost to $6 billion.

gDow is extremely disappointed with the decision by the Kuwait Government and is in the process of evaluating its options pursuant to the joint venture formation agreement,h Dow said today in the statement.

Dow would receive more than $2 billion if Kuwait breaks the deal, Liveris said in a Dec. 18 interview. Either side can claim as much as $2.5 billion if the other cancels the transaction, Dow said in a Dec. 1 regulatory filing.

Dow, based in Midland, Michigan, rose 23 cents, or 1.2 percent, to $19.34 on Dec. 26 in New York Stock Exchange composite trading. The shares have declined 53 percent in the past year. Rohm & Haas fell 32 cents to $63.56. Dow in July agreed to buy Philadelphia-based Rohm & Haas for $78 a share.

Food Packaging

K-Dow would be the worldfs largest producer of polyethylene plastic, used in milk jugs, food packaging and plastic pipes. The venture would employ more than 5,000 people and have annual revenue of about $15 billion, including $4 billion from the addition of two prior partnerships between Kuwait and Dow.

Dow on Dec. 1 announced it cut the original $9.5 billion price that Petrochemical Industries was to pay because of the weak economy and declining oil prices. Kuwaitfs Supreme Petroleum Council approved the transaction at the reduced price, and the agreements were signed Nov. 28.

The Kuwaiti government has been under pressure from opposition lawmakers to scrap the deal, which they said was overpriced. Some members of parliament threatened public questioning of Prime Minister Sheikh Nasser al-Mohammed al- Sabah, a nephew of Emir Sheikh Sabah al-Ahmed al-Sabah, Kuwaitfs ruler. They said the investment was too large at a time of falling oil prices.

New York crude closed last week below $38 a barrel, compared with a record $147.27 in July.

Maha Mulla Hussain, Petrochemical Industries chairman, has said the venture would allow Kuwait to diversify its economyfs focus on oil and gas to petrochemicals and plastics.

Petrochemical Industries is a subsidiary of Kuwait Petroleum Corp., the state oil company.

2009/1/6 Dow@

Dow Chemical Confirms Commitment to Transformational Corporate Strategy
Will Pursue Legal and Other Options on Kuwait Deal; Accelerates Discussions around New Partnerships; Reiterates Commitment to Strong Investment Grade Rating

The Dow Chemical Company today announced a wide range of legal, operational and financial actions that will keep the Company on track to fulfill the transformational corporate strategy Dow has pursued since 2005.

Dow's strategy will continue to involve aggressive steps to establish Dow as a high-performance, earnings growth company organized around a strong portfolio of joint ventures and market-facing performance business divisions. Central to Dow's strategy is its commitment to retain a strong investment grade rating and to maximize shareholder return.

According to Dow Chairman and CEO Andrew Liveris, the recent decision by Dow's partners in Kuwait to abandon the terms of its Joint Venture Formation Agreement (JVFA) will not deter the Company from pursuing the transformational strategy that has been Dow's roadmap for future growth and profitability.

"While the events of the past week have been extremely disappointing and completely unexpected given where we were in the approval process, Dow is and will continue to be a strong, globally diverse company with a wide range of options available to us for delivering on our strategy. It is certainly true that the actions in Kuwait have accelerated the need for decisive action but our strategy remains as relevant as ever and will drive the choices we make to become a company that will thrive in the changing markets of the 21st century."

Dow to Pursue Legal and Other Options to Fulfill Rights under Kuwait Agreement
On December 31, 2008, Dow received official written notice from Petrochemical Industries Company (PIC) of Kuwait that the closing must be postponed because the Kuwaiti Supreme Petroleum Council withdrew its earlier approval of the transaction. As a result, Dow has said it will seek to enforce its rights under the terms of the various agreements and the JVFA executed by Dow and PIC since the joint venture partnership was first announced in December 2007.

"We were shocked by this news, and this was completely unexpected given the approvals already received and the behavior, actions and words from our partners. We have over 1,500 documents prepared for closing for what we believed to be Day 1 of K-Dow Petrochemicals on January 2," said Liveris. "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 PIC is in breach of contract, and we must take action to protect the interests of our company and our shareholders."

Beyond K-Dow: New Partnerships, New Opportunities
Although Dow is prepared to close K-Dow immediately if PIC does indeed cure the breach of contract, the Company has already been approached by other interested parties about joint venturing with Dow for the basic plastics businesses. As a result, Dow has also announced it will establish a formal process to secure a joint venture partner to accomplish the goals of its asset light strategy. The core businesses involved in the K-Dow joint venture include strong Dow franchise businesses, among them the largest and strongest producer of polyethylene in the world. Polyethylene is the world's largest thermoplastic and for the last several decades has grown well above global GDP.

"Prior to signing the definitive agreement with our Kuwaiti partners about the K-Dow joint venture, we had other options and partners to consider," Liveris said. "Some of these discussions were active as recently as November, and we have already been contacted by other interested parties and have begun discussions. This can be done on an accelerated timeline due to the considerable groundwork that has already been established in anticipation of the K-Dow joint venture."

Dow believes that the identification of an alternative joint venture partner for Dow's basic plastics business combined with the acceleration of planned divestitures and several additional divestments that are consistent with the Company's strategy will yield proceeds greater than the funds Dow expected to receive in connection with the K-Dow joint venture.

Remaining Responsive to a Volatile Global Economic Environment
While the status of the K-Dow joint venture has created an unexpected hurdle for Dow's corporate strategy, the Company has a long history of responding quickly and aggressively to the rapidly changing external events that are characteristic of the global economy in the 21st century.

Indeed, many of the elements of the transformational strategy Dow has pursued since 2005 were created in response to the rapidly changing global environment. For example, extreme fluctuations in hydrocarbon prices in the US and other parts of the world led to the development of Dow's "asset light" strategy which has sought to develop new facilities in parts of the world where hydrocarbon costs are lower and more consistently predictable.

Earlier in 2008, with petroleum costs at an all-time high, Dow again responded aggressively with company-wide price increases that reinforced Dow's commitment to assuring financial performance despite rapidly changing external factors.

"In this volatile economic environment, the marketplace will reward companies committed to becoming leaner, more agile and more responsive to both challenges and opportunities," Liveris said. "Dow will be precisely this kind of company, and we intend to emerge from the current economic climate a more formidable competitor, better able to meet the considerable opportunities of this century."

Commitment to Financial Discipline and Maintaining Strong Investment Grade Credit Ratings
Since the onset of the global financial crisis in September 2008, Dow has taken aggressive actions to reduce capital spending, working capital and operating expenses. With further weakening in the global economy, Dow announced a restructuring in December which will reduce the Company's workforce by approximately 11 percent, close facilities in high-cost locations and divest several non-strategic businesses. "We undertake actions like these with a very clear outcome in mind -- to preserve our financial flexibility and improve our financial performance.

We took aggressive action in 2008 and we will accelerate these actions even faster and more aggressively in 2009," said Liveris. "The measures will also allow us to preserve our strong investment grade rating - a commitment we take very seriously. These actions include an acceleration of expense and capital reduction programs as well as cash preservation measures that ensure we retain our options and financial flexibility during these volatile and uncertain times."

Commitment to Dow Shareholders
The combination of planned actions on cash flow as well as operating earnings will allow Dow to continue to pay our regular, quarterly cash dividend, which the Company has done for 389 consecutive quarters without reduction or interruption, since 1912.

January 9, 2009 NYT

Close to Midnight for Dowfs Rohm Deal

Dow Chemicalfs $15.3 billion acquisition of Rohm & Haas was cleared by the European Commission on Thursday. Under the acquisition agreement, the only remaining condition to Dowfs obligation to complete the transaction is United States antitrust clearance from the Federal Trade Commission. Presumably, European and United States regulators are coordinating their reviews, as they usually do. So it is likely that the U.S. clearance should come soon.

And yet Rohmfs shares are trading at a deep discount to Dowfs takeover price, implying that investors think this deal is anything but sewn up.

Under the Dow-Rohm acquisition agreement, Dow must complete its purchase of Rohm two business days after satisfaction of all the conditions to completion of the acquisition - which now leaves only antitrust clearance in the U.S. More particularly, closing takes place at 10 a.m. at the offices of Rohm's counsel, Wachtell, Lipton, Rosen & Katz.

There are few things to note here:

1. Dow didnft seem too happy about the clearance. Its press release Thursday simply noted the event. Compare that with Rohm, which issued a separate press release disclosing the fulfillment of the condition and stating that gRohm and Haas Company continues to work diligently towards completing the proposed transaction with Dow in early 2009.h There was no similar statement by Dow.

2. Dowfs requirement to pay a gtickingh fee is independent of the requirement to close. As of Jan. 10, Dow pays an 8 percent ticking fee on the deal consideration of $78 a share. This additional consideration would ultimately be paid when the deal closes. Importantly, the payment of the ticking fee doesnft have anything to do with Dowfs requirement to close under the acquisition agreement. The fee is simply compensation to Rohmfs shareholders for the delay, but doesnft give Dow a right to delay the deal by paying the fee, as some have reported.

3. Dow doesnft appear to have many arguments to escape the agreement. Unless Dow can claim a material adverse change, or MAC, the U.S. antitrust condition is not fulfilled or Dow can come up with some clever third argument, Dow is required to close the deal. Rohm can force Dow to specifically perform the agreement, meaning Dow would be required to complete the transaction and pay Rohm shareholders the cash consideration.

There simply does not appear to be a MAC claim here. As for the antitrust condition, the Federal Trade Commission may demand significant divestitures to clear the transaction. But under section 5.6(d) of the agreement, Dow is required to make divestitures in the aggregate no greater than g$1.3 billion of revenue for the 12 months ending December 31, 2007.h

However, up to this threshold, Dow is only required to make any divestitures gin the case of the companyfs assets, businesses and product lines of or marketed or otherwise conducted through the entity identified on Schedule 5.6(e).h Of course, that schedule is not disclosed.

Still, there have not appeared any signs from the Federal Trade Commission that it is going to require deal-cratering divestitures from Dow. In any event, Dow would be required to litigate the agencyfs action to a final order under the agreement, at least through Oct. 10, 2009.

So what gives? Why is Rohm trading at about $60 a share, a 23 percent discount to the takeover price, on a deal that should close within the next month?

Well, other than the disappearance of the arbitrage business and the continuing unwillingness of professional investors to take risk, here is another good guess: the fear is that Dow is going to create a litigation position.

Perhaps Dow could argue that specific performance isnft appropriate here, since it is a cash deal. Specific performance under Delaware law is generally to be awarded only in the case that monetary damages are unavailable. Here, since it is a cash transaction, the damages are theoretically measurable in monetary terms.

If Dow won this argument, it could then make a secondary argument that the law of Consolidated Edison, Inc. v. Northeast Utilities, a case decided in New York, applies. In that controversial decision, the Second Circuit held that a target could not sue for the share premium on a failed deal, as these were damages of the shareholders, not the company. Instead the monetary damages of the target should be limited to its out-of-pocket expenses. Meanwhile, the shareholders were out of luck and could not sue because of a no-third-party-beneficiary clause in that acquisition agreement. This argument, if successful, would leave Rohm out of luck with a damages claim worth only a couple of hundred million dollars, at best.

The problem with this approach is that the agreement has a specific performance clause (a similar clause was just enforced in the litigation involving Hexion Specialty Chemicals and Huntsman), so the default rules likely do not apply.

Moreover, Ifve always been skeptical that Delaware would adopt the Con Ed holding as it doesnft make much sense, although this is admittedly an uncertain proposition. Other than this argument, Ifm hard pressed to see anything else Dow could argue.

Alternatively, Dow could threaten a bankruptcy. I suppose that this might work, but Dow, unlike Hexion, is a real company with substantial assets. Declaring bankruptcy merely means that Rohm becomes Dowfs largest unsecured creditor and likely ends up acquiring Dow. I donft see the chief executive of Dow, Andrew N. Liveris, allowing this.

So perhaps Dowfs goal here is a delay to buy time to raise funds and preserve its dividend. It certainly appears to be engaged in a public-relations campaign to that effect. But the decision to delay must be agreed to by Rohm. Rohm could agree to a closing in escrow, where Dow waives all of the conditions and agrees to a closing at a certain later date.

But why would Rohm do this? And what does Dow get out of this? Forced selling is not a way to raise capital but rather a sure means to obtain fire-sale prices. At the end of the day, I am not sure Dow really gains that much from a delay. This is not Huntsman-Hexion, where Rohm is in danger of collapse and delay works to Dowfs advantage.

Moreover, the economics of financing the deal seem to hold up. The one-year, $13 billion bridge loan, together with the $3 billion Berkshire Hathaway investment and cash on the balance sheets of each company should be enough to finance the transaction. That is before the Kuwait Investment Authorityfs $1 billion preferred investment, and any break-up fee of up to $2.5 billion that Kuwaitfs Petrochemical Industries Company might have to pay because of the collapse of the K-Dow joint venture.

Dow hasnft disclosed the joint venture agreement, merely described it in this Form 8-K, so it is impossible to determine if Dow is entitled to the $2.5 billion or not. Nonetheless, P.I.C. is arguing that the closing would violate a Kuwaiti government order and Kuwaiti law, namely the instruction of the Council of Ministers of Kuwait to P.I.C.fs regulator to withdraw approval of the transaction.

Finally, Delaware hasnft been too kind to acquirers who appear to be trumping up reasons to escape their contractual obligations.

Dow may be playing a game of chicken here, perhaps to preserve its dividend through a price reduction, but ultimately, unless there are important facts that are not publicly disclosed (such as a real antitrust problem or a quirk in the agreement that people have missed), Dow doesnft have a strong position.

Rohm may still agree to forgo litigation in the interests of a quicker closing at a reduced price. But even here, there would need to be a revote on the deal or it would have to be flipped into a tender offer. Furthermore, what are Rohmfs incentives to do so? A more likely scenario is that Rohm would file litigation immediately upon fulfillment of the U.S. antitrust condition or any signs that Dow is dragging its feet.

Still, the arbitrage discount is too big to ignore ? and we have seen in other deals that this discount too often turns out to be self-fulfilling. This is a fear, but maybe not an irrational one based on past events.

2009/3/6 Bloomberg

Dow Chemical, Rohm & Haas Jump After Disclosing Talks

Dow Chemical Co. and Rohm & Haas Co. rose in New York trading after the chemical makers said they have restarted talks on their stalled $15.3 billion merger and a pending lawsuit related to the deal.

Dow, based in Midland, Michigan, rose 64 cents, or 9.9 percent, to $7.11 at 4:01 p.m. in New York Stock Exchange composite trading. Philadelphia-based Rohm & Haas gained $9.79, or 18 percent, to $63.80. Dow agreed in July to buy Rohm & Haas for $78 a share.

Dow Chief Executive Officer Andrew Liveris has said closing the deal without better financing or asset sales would threaten the companyfs survival. Dow said today its lenders agreed to provide an option to extend a bridge loan for financing the deal by one year to April 2011. Rohm & Haas sued to force Dow to complete the merger, and the trial is scheduled to begin March 9.

gWe expect a settlement this weekend, because on Monday the trial begins,h said Amit Shabi, a partner at Geneva-based Bernheim Dreyfus & Co., which owns Rohm & Haas shares. gExtending the bank loans for a year will give them time to sell assets and do it in a less distressed way.h

Dow, the biggest U.S. chemical maker, has said it is committed to the merger and is seeking new terms from Citigroup Inc. and other lenders after the collapse of a joint venture with Kuwait deprived the company of $9 billion. The amended loan is $12.5 billion, $500 million less than prior financing, and $8 billion of the total can be borrowed for two years, the company said in a filing.

eIn Discussionsf

Dow Chemical and Rohm & Haas are gin discussions relating to the merger of their companies and the pending litigationh and would not immediately provide further detail, the chemical makers said today in a statement. Rohm & Haas spokesman Emily Riley declined to elaborate, and Dow did not immediately respond to questions about the merger.

In addition to the bridge loan, Dow has arranged a $3 billion equity investment from Warren Buffettfs Berkshire Hathaway Inc. and a $1 billion investment by the Kuwait Investment Authority.

The transaction remains gprohibitiveh for Dow unless it can reduce its financing needs by selling its agriculture unit for at least $7 billion, Paul Christopherson, an analyst with Gilford Securities Inc. in Morristown, New Jersey, said today in a telephone interview.


Liveris has said he may sell the companyfs Dow AgroSciences unit, which makes pesticides and develops genetically modified seeds, or other assets to help fund the buyout. Syngenta AG, the worldfs biggest maker of farm chemicals, said this month it would consider buying the unit. Dow AgroSciences had $4.5 billion in sales last year and is worth $5 billion to $7 billion, HSBC analyst Hassan Ahmed said this month.

Shabi said hefd prefer Rohm & Haas settle the lawsuit, even though the company probably would prevail at next weekfs trial in Delaware Chancery Court, because a judgefs ruling is never predictable.

gI thought Rohm & Haasfs case was very strong, but therefs always risk,h Larry Hamermesh, a professor at the Widener University Law School and an expert on Delaware corporate law, said today in a telephone interview. gFor anybody, a settlement offers more certainty than trying to roll the dice of litigation.h

Recent rulings in Delaware, such as cases involving Hexion Specialty Chemicals Inc. and Tyson Foods Inc., suggest judges are more willing to order the kind of specific performance Rohm & Haas sought in its lawsuit, Hamermesh said.

Hexion-Huntsman Deal

In September, Delaware Chancery Court Judge Stephen Lamb ruled Columbus, Ohio-based Hexion didnft have the grounds to cancel its $6.5 billion offer for Huntsman Corp. because of a slump in the chemical markets. The ruling was short of ordering Hexion to complete the deal.

In the Tyson Foods case in 2001, Chancery Court Judge Leo Strine Jr. ordered that company to complete its $4.7 billion acquisition of IBP Inc. even after claims that financial problems voided the agreement.

Dow Chemicalfs commercial paper and short-term credit ratings were lowered today by Standard & Poorfs because of concern company finances may be hurt if it is forced to acquire Rohm & Haas under the original terms.

The ratings were reduced to A-3 from A-2, one level above junk, S&P said today in a statement. Dowfs corporate credit and senior unsecured debt rating of BBB, two levels above junk, may be lowered if the merger closes on the agreed-upon terms or if the company refuses to close and is found liable for a large legal judgment, S&P said.

Credit Rating

Dow Chemical gis encouraged that our ongoing discussions with the rating agencies generally, and S&P specifically, have resulted in no change to Dowfs long-term corporate credit rating,h the company said in a separate statement. gDow has been and continues to be in a constructive dialogue with the rating agencies.h

On Feb. 12, Dow Chemical cut its dividend by 64 percent, the first reduction in company history, to save $1 billion a year.

In December, Kuwaitfs Petrochemical Industries Co. canceled an agreement to buy a 50 percent stake in Dowfs plastics unit. Dow is seeking more than $2.5 billion in damages from Kuwait for the failed venture.

Dow also is grappling with the worst markets for its products in a generation. Fourth-quarter sales fell 23 percent as sales volumes and prices plunged, prompting Dow to reduce factory operating rates to the lowest in more than 25 years.

Dow Share Performance

Dowfs stock price has tumbled 79 percent since July 9, the day before the Rohm & Haas acquisition was announced, while Rohm & Haas has gained 42 percent. Dow, which was worth more than three times Rohm & Haas by market capitalization, is now worth about half its acquisition target.

Dow said in December it is eliminating about 5,000 jobs, or 11 percent of its workforce, permanently closing 20 facilities and idling 180 plants. The contractor workforce is being cut by 6,000. Demand for most products probably will fall in 2009, Liveris said.

Dow, founded in 1897, makes 3,200 products, including plastics, pesticides and Styrofoam, at more than 150 production sites in 37 countries.