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Business
DuPont Dow Elastomers Being Dissolved
by Alexander H. Tullo
January 10, 2005
| A version of this story appeared in
Volume 83, Issue 2
SPLITSVILLE
The $1.2 billion-per-year DuPont Dow Elastomers joint venture will soon be no more.
Dow Chemical is exercising its option to pull the Engage olefin elastomer, Nordel hydrocarbon rubber, and Tyrin chlorinated polyethylene businesses from the partnership.
After this transaction, DuPont will purchase Dow's remaining interest in the venture for $87 million and operate the remaining businesses--including Neoprene polychloroprene rubber, Hypalon chlorosulfonated polyethylene, Kalrez perfluoroelastomer parts, and Viton fluoroelastomers--as a wholly owned subsidiary under a different name.
The companies expect to close the deal on June 30, following regulatory approvals and other conditions.
Last April, DuPont announced it would direct DuPont Dow's response to an ongoing Department of Justice antitrust investigation into synthetic rubber. A DuPont spokesman says the response needed agreement between each party in the joint venture and that the best way to do this was to put DuPont in charge. "We felt there was a true need to streamline decision making," he says.
DuPont also said in April that it would assume the first $150 million in antitrust liabilities and 75% of all liabilities beyond that figure. At the time, the partners also set up Dow's option to exit the venture. The DuPont spokesman denies that his company assumed responsibility because it was predominantly DuPont products under legal scrutiny.
One industry watcher suspects that there was more to the breakup of the venture than the antitrust pressures. "The partners were moving along different paths and the venture was something they didn't want to continue," he says.
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