Dow Rethinks its $20 Billion Saudi Chemicals Bet

Dow Inc. is considering selling its 35% stake in Sadara Chemical, a $20 billion joint venture with Saudi Aramco. This potential sale is part of a broader effort by Dow to streamline its portfolio amid a prolonged downturn in the global chemicals industry. Dow currently holds a negative investment balance of $793 million in Sadara, and has been exposed to the venture's financing obligations.

Despite this, Sadara remains a significant industrial asset, operating a complex in Jubail with over 3 million metric tons of annual chemicals and plastics capacity. The potential sale could provide Dow with increased financial flexibility, allowing the company to redirect capital toward more profitable ventures. However, selling could also limit the company's potential upside if the global chemicals market recovers.

Additionally, an exit might be viewed as a defensive move if Dow's earnings and cash-flow conditions remain weak elsewhere.