Merger would only help Rohm shareholders, hurt workers - Dow

03 February 2009 16:00  [Source: ICIS news]

Dow responds to Rohm and Haas lawsuitTORONTO (ICIS news)--Forcing through Dow Chemical's merger with Rohm and Haas would benefit only one party - the current shareholders of Rohm and Haas -  and it could hurt the companies' employees, Dow said in a court filing on Tuesday.

Dow, which responded to Rohm and Haas' lawsuit from last week, reiterated that under current financial market conditions and the prevailing uncertainty, the merger would threaten the viability of the new entity and was contrary to the interests of the 55,000 Rohm and Haas and Dow employees, the associated communities, suppliers and customers.

“For those employees in Philadelphia, Pennsylvania, Midland, Michigan and the hundreds of other communities in which Dow, Rohm and Haas and their many customers and suppliers do business, the viability of the merged entities and their prospects for creating value are vital,” Dow said.

“The interests of all who make up Dow and Rohm and Haas, and not just the narrow interests of some, must be balanced carefully before the drastic remedy of specific performance is ordered,” it said.

In a point-by-point response reviewing the history of the merger deal, Dow said that until late December - and even in the ongoing financial market turmoil - it stood by its deal to acquire Rohm and Haas for $18.5bn (€14.4bn), including debt, for $78/share.

However, Kuwait’s unexpected withdrawal from the K-Dow petrochemicals joint venture, and the sudden unavailability of about $9bn in cash would force Dow, if it were to complete the Rohm deal, to draw down a comparable amount on a short term bridge loan under conditions that would quickly place it in default, it said.

"Over a period of mere days and weeks, a confluence of dramatic and unforeseeable shocks - to Dow, to the chemical industry as a whole, and to financial markets - upset all reasonable expectations and cast a dark shadow of uncertainty over the viability of the Rohm and Haas acquisition," Dow said.

Dow's 62-page court filing is available on its website.

Earlier on Tuesday, Dow reported a net loss of $1.55bn for the fourth quarter of 2008 on Tuesday as demand dropped away sharply and the company took restructuring and other charges.

For more on Dow Chemical and Rohm and Haas visit ICIS company intelligence
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By: Stefan Baumgarten
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