US Dow to close Rohm and Haas deal for $78/share

09 March 2009 21:05  [Source: ICIS news]

Dow headquartersHOUSTON (ICIS news)--US major Dow Chemical will buy Rohm and Haas for $78/share (€61.62/share) as part of a settlement reached by the two sides on Monday, Dow said.

The settlement matches Dow's initial offer for the company. However, Dow restructured the composition of the deal.

Under the restructured terms, the two largest shareholders of Rohm and Haas have agreed to buy $2.5bn in preferred equity to be issued by Dow, the company said.

Also, the Haas Family Trusts could make an investment in an additional $500m of Dow equity, the company said.

As such, Dow will now pay $63/share in cash and $15/share in preferred equity securities, the company said.

Dow's financing will also include a $3bn investment from Berkshire Hathaway and $1bn by the Kuwait Investment Authority (KIA), the company said. Other sources include a $12.5bn bridge loan.

The two companies could raise another $4bn from selling off businesses and stakes, Dow said.

These divestments will help offset a cash shortfall caused by the collapse of another deal, Dow's joint venture with Petrochemical Industries Co (PIC) of Kuwait. Dow would have received $9bn from the deal.

The divestments include Dow's 45% stake in Total Raffinaderij Nederland NV, a Dutch petroleum refining partnership, the company said. Dow will also sell some of its equity stakes in its olefins and derivatives business in SE Asia.

Rohm and Haas will sell its Morton Salt division, Dow said.

In addition, Dow and Rohm and Haas plan to sell of $4bn worth of businesses and stakes.

Rohm and Haas sued Dow in Delaware Chancery Court, after the company missed a 27 January deadline to close the merger.

Dow now has a 1 April deadline to close the deal, the company said.

($1 = €0.79)

For more on Dow or Rohm and Haas visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2645

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