March 11 (Bloomberg) -- Dow Chemical Co., the largest U.S. chemical maker, is in talks to revive a basic-plastics joint venture with Kuwait that the country’s Petrochemicals Industries Co. abandoned last year.

“We are definitely in discussions,” Chief Executive Officer Andrew Liveris said today in a telephone interview. “I want to downplay expectations because of what happened last time.”

Kuwait’s cancellation of the K-Dow Petrochemical venture in December deprived Dow of $9 billion it planned to use for its acquisition of Rohm & Haas Co. That left Liveris seeking to amend financing and obtain new terms for the $16.5 billion purchase, which was agreed upon March 9.

Dow, based in Midland, Michigan, also is talking with two “very interested” parties about buying a stake in the basic- plastics unit, Liveris said. The likelihood of reaching a new deal with Kuwait is “low,” he said.

“I have learned that unless the money is in the bank, OK, I am not going to promise it,” Liveris said.

Dow fell 44 cents, or 6.4 percent, to $6.43 as of 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 57 percent this year.

Bidding War

Liveris said he didn’t include a clause in the Rohm & Haas merger agreement that would have let Dow out of the deal if the Kuwait venture failed because no one anticipated the financial collapse that occurred after the agreement was signed July 10. Dow won the Rohm & Haas auction with a $78 a share bid, topping BASF AG’s $75 offer.

“Even if you wanted a financing out, you wouldn’t have won Rohm & Haas’s bid because BASF would have won it,” Liveris said.

Kuwait canceled the K-Dow venture on Dec. 28 after opposition lawmakers pressured the government to scrap the deal, which they said was overvalued amid falling oil prices. The cancellation prompted Standard & Poor’s and Moody’s Investors Service to cut Dow’s credit ratings.

Dow plans to sell $4 billion of assets this year as part of a plan to repay as much as $10 billion in short-term loans for the Rohm & Haas purchase, which closes April 1, and to maintain investment-grade credit ratings. A deal to sell Rohm & Haas’s Morton Salt unit, the biggest U.S. salt producer, for at least $1.5 billion will be announced this month, Liveris said.

“We are moving on that one very fast,” Liveris said. “Given what we achieved in five days recently, I would consider it almost wimpy of us not to achieve it in 20 days.”

‘Serious Bidders’

Dow will narrow six “serious bidders” for Morton Salt to three, possibly selecting one for exclusive negotiations, by this weekend, he said.

The value of Dow AgroSciences, which makes pesticides and develops genetically modified seeds, isn’t appreciated by investors, Liveris said. The unit “clearly” is worth more than the $5 billion to $8 billion that some analysts have estimated, he said. The company doesn’t immediately plan to sell the business, Liveris told investors on a March 9 conference call.

Asset sales are part of efforts to improve Dow’s balance sheet so another dividend cut “should never be necessary,” Liveris said. Dow slashed its dividend 64 percent on Feb. 12, the first reduction in company history, to save $1 billion a year, after Liveris promised not to cut the payments.

“After the events of the last three months, it would be terrible of me to say never again,” Liveris said.

To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.

Last Updated: March 11, 2009 16:58 EDT