By: Bruce Davis Rubber & Plastics News Staff
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Wilmington, Delaware-Dow Chemical Co. and DuPont Co. are reviewing the business prospects for their DuPont Dow Elastomers LLC joint venture, with splitting the assets and dissolving the venture one possibility.
In connection with DuPont Dow Elastomers´ involvement in an EPDM price-fixing investigation, Dow disclosed it has negotiated an option with DuPont to acquire certain DuPont Dow Elastomers assets related to ethylene and chlorinated elastomers.
The companies described the transaction as "cashless" to Dow and based on "fair market values." Should Dow exercise this option, they said, DuPont agrees to buy Dow´s remaining equity interest in DuPont Dow Elastomers, estimated to be worth no more than $300 million, according to a report by Deutsche Bank Securities Inc. analyst David E. Begleiter.
Spokesmen for the companies declined to specify which assets are involved, but Dow originally contributed its proprietary Insite metallocene catalyst technology to the venture when it was formed in 1995-96. DuPont Dow Elastomers literature points to its use of Insite technology in its elastomeric products.
Dow considers itself to be the "world´s leading supplier of polyethylene-based solutions through sustainable product differentiation." Through the use of multiple catalyst and process technologies, Dow said it offers "one of the industry´s broadest ranges of polyethylene solutions" for a variety of applications.
A Dow spokesman said the companies are in the process of evaluating the assets but had not formed any clear direction.
DuPont Dow Elastomers has three product lines that could fit the definition: Tyrin chlorinated polyethylene, Hypalon chlorosulfonated polyethylene and Acsium chlorosulfonated polyethylene.
The spokesman cited two key aspects in Dow´s decision to seek the option: the ongoing antitrust price-fixing investigation and slower-than-anticipated growth by the venture.
DuPont Dow posts annual sales of more than $1 billion, but does not break down sales by product categories. Sales of this magnitude are only slightly better than those outlined in 1996 when the venture was established. The partners projected then that the venture would double in size to $2 billion in sales by 2000-01.
The companies disclosed the agreement in connection with their decision to assign DuPont the lead responsibility for dealing with DuPont Dow´s involvement in antitrust investigations and price-fixing litigation.
DuPont Dow´s offerings also include four other product lines: Neoprene polychloroprene rubber, Nordel EPDM rubber, Kalrez perfluoroelastomers and Viton fluoroelastomers.
