updated 12/13/2007 5:17:08 PM ET 2007-12-13T22:17:08

Dow Chemical plans to sell a 50 percent interest in five of its global businesses to a Kuwaiti company for about $9.5 billion and form a new joint petrochemicals venture, the world's second largest chemical company said Thursday.

Shares of Dow Chemical jumped more than 6 percent Thursday morning following the announcement.

Dow said the transaction with Petrochemical Industries Co., a subsidiary of state-owned Kuwait Petroleum Corp., is subject to the completion of definitive agreements and regulatory approvals.

Dow expects the deal to close in late 2008.

The joint venture will be based in the U.S. and employ more than 5,000 people worldwide, mostly current Dow employees, the company said.

It will manufacture and market polyethylene, polypropylene and polycarbonate plastics, and ethylenamines and ethanolamines. Amines are a family of chemical compounds with a broad range of properties that are used in various applications, including wood treating, pharmaceutical processing and coatings.

The value of Dow's five global businesses that will form the joint venture is approximately $19 billion, it said.

"This joint venture, after it closes, day one and beyond, will be the player in the petrochemical field," Andrew Liveris, Dow's chairman and chief executive, said during a teleconference with industry analysts. "Make no bones about it. And we'll have the resources to grow where the growth is occurring, and the Dow Chemical Co. shareholders will benefit from that."

For Kuwait Petroleum, the deal will help maximize the value of its resources while helping to diversify Kuwait's economy, said CEO Saad Al-Shuwaib.

"Through this joint venture, KPC enters a new arena of specialty products based on leading global??technologies," Al-Shuwaib said in a news release. "The (joint venture) will enable PIC to expand and diversify its international petrochemicals presence, while building on our long-standing relationship with Dow."

The deal did not surprise analysts, following a series of agreements between Western companies and Middle East ventures. Both are seeking to diversify holdings.

"We expect a positive stock response but likely muted given a deal of roughly this nature has been anticipated for some time," John Roberts, an analyst with Buckingham Research Group, wrote in a note to investors.

Shares of Midland-based Dow rose $2.64, or 6.3 percent, to close at $44.39 Thursday after reaching as high as $45.50 earlier in the day.

In April, Dow fired two executives, accusing them of holding secret buyout talks with outside interests.

The shakeout occurred after a British tabloid reported that a group of Middle Eastern investors and U.S. buyout firms had secured financial backing for a $50 billion bid. Dow first said it wasn't involved in any talks, then said the two executives had engaged in secret talks without company permission.

Both denied wrongdoing.

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