Emerging sectors key to Dow Rohm and Haas deal

10 July 2008 14:17  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--The acquisition of Rohm and Haas will make Dow the world’s leading specialty chemicals and advanced materials company, Dow Chemical said on Thursday as it revealed its $18.8bn (€12bn) agreed takeover of the Philadelphia-based group.

Combining the companies’ technologies, geographic reach and industry channels would create an outstanding business portfolio with significant growth opportunities, Dow said.

The Rohm and Haas name and headquarters location will be retained as Dow adds coatings, biocides and personal care products businesses to the Rohm and Haas portfolio to create a $13bn turnover materials business unit.

Dow said that Rohm and Haas gives it access to new technologies and extends its reach into emerging geographies which are complementary to its existing growth platforms and value growth priorities.

“Rohm and Haas provides Dow with an excellent position in a number of industry segments that are poised for significant growth given long-term mega trends, most notably in the electronic materials and coatings segments," Dow said in a statement.

The Rohm and Haas businesses in water solutions, adhesives, personal care, biocides and building and packaging materials are also attractive, it added.

The acquisition is expected to add to Dow’s earnings in the second year after completion and pre-tax annual cost savings of $800m/year are targeted from cutting back on corporate overheads and governance while saving on raw materials and working processes.

Dow expects sales to be boosted through broader product portfolios in coatings, electronics and adhesives, combining its dispersions know-how with the Rohm and Haas acrylic latex position, its polymer science in the Rohm and Haas display films and electronics business as well as adhesives know-how.

Rohm and Haas chairman and CEO Raj Gupta said the agreed deal with Dow gave Rohm and Haas the opportunity to re-invent itself yet again.

The offer represents a premium of 75% over the Rohm and Haas closing share price on Wednesday.

Acquisition financing includes $3bn in equity investment, in the form of convertible preferred securities, from Berkshire Hathaway and $1bn from the Kuwait Investment Authority. Debt financing has been committed by Citigroup, Merrill Lynch and Morgan Stanley, Dow said.

($1 = €0.64)

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By: Nigel Davis
+44 20 8652 3214



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