Reliance to enter JV with US-based Dow Chemicals
By siliconindia | Friday, 16 March 2007, 05:00 Hrs
India's Reliance Industries Ltd. is close to signing a deal for a 59 percent stake in a $20 billion joint venture with U.S.-based Dow Chemical Co., reported a national daily. Dow's basic chemicals and plastics business would be spun off into a separate company, with Reliance paying about $12 billion for its stake and Dow picking up the remainder, the paper said in a report. The daily revealed that a deal could be finalized soon and that the two companies were expected to make a formal announcement by the weekend. Dow's shares rose 5.6 percent on Thursday on speculation it may be the target of a leveraged buyout. Tthe joint venture would seek to set up manufacturing and research and development units in the United States, India and developing countries. "Reliance has been using Dow technology for its petrochemical complexes in India. This deal is a natural progression for the two to enter into a JV," said unnamed Reliance official. In the deal Reliance would hold the right to buy Dow's proposed 41 percent holding in the joint venture if a third party offered to buy the American firm's stake. Reliance was likely to fund the joint venture by selling some of its stock either to Dow directly or to investors and then investing the cash in the joint venture, the Times of India said.