Dow Chemical's Kuwait Deal Fizzles

With a central piece of its asset-light strategy eliminated, analysts wonder how the chemical giant can withstand the economic downturn

The fallout from the global financial crisis has claimed yet another victim. The Kuwaiti government's 11th-hour cancellation of a $17.4 billion joint venture puts a big crimp in Dow Chemical's (DOW) long-nurtured strategy to cut production costs and reduce its vulnerability to economic downturns by shifting focus from commodity chemicals to higher-margin specialty products. And with the Kuwaiti deal kaput, another major piece of Dow's transformation strategy—its planned $18.8 billion acquisition of Rohm & Haas (ROH)—is now in question.

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