TimelineDow goes from lawsuit to Rohm and Haas merger

10 March 2009 17:43  [Source: ICIS news]

HOUSTON (ICIS news)--Dow Chemical expected that its merger with Rohm and Haas would transform it into a major specialty chemical producer, freeing it from volatile commodities.

Accelerating the change was Dow's joint venture with Kuwait's Petrochemical Industries Co (PIC), which would relieve Dow of its basic businesses and provide it with $9.00bn (7.11bn) for the Rohm and Haas deal.

From the time Dow announced the deals, credit choked up and commodity markets crashed, causing both deals to collapse.

Rohm and Haas sued Dow after it missed a 27 January deadline to close the deal. The two sides have since settled, and Dow now plans to close the deal by 1 April.

The following timeline lists the events that led to the Rohm and Haas lawsuit and settlement.

9 March 2009: Dow and Rohm and Haas reach a settlement, under which Dow will take over the company by the agreed-upon price of $78/share. Late fees will boost the cost to nearly $79.

6 March 2009: Dow confirms that it is in talks with Rohm and Haas, days before their trial is scheduled to start.

2 March 2009: Dow says it will consider selling any asset to increase its financial flexibility.

21 February 2009: Dow starts arbitration proceedings against PIC. Dow seeks more than $2.5bn in damages.

12 February 2009: Dow cuts its dividend to 15 cents/share, down from 42 cents, in a reversal of an earlier pledge made by CEO Andrew Liveris.

11 February 2009: Dow investor Michael Blum files a suit, demanding that the company fires Liveris. Dow called the suit "defective".

9 February 2009: Rohm and Haas reports that its fourth-quarter net profit fell 82% due to weak demand.

5 February 2009: Major Rohm and Haas shareholder Paulson & Co outlines steps that Dow could take to close the merger. According to Paulson, Dow could sell $4bn of new common equity; issue bonds; and reduce its dividend to 1 cent/share.

3 February 2009: Dow reports a massive $1.55bn loss for the fourth quarter due to weakening demand and restructuring charges.
Dow says its basic plastics and chemicals businesses grabs the attention of possible buyers after being spurned by PIC

26 January 2009: Rohm and Haas sues Dow in Delaware Chancery Court, accusing the company of breaching the agreement. Rohm and Haas asks the court to order Dow to immediately close the deal.

25 January 2009: Liveris informs Rohm and Haas that Dow does not intend to close the merger by the 27 January deadline.

24 January 2009: Dow executives meet again with Rohm and Haas, saying that the current closing schedule would be "economically disadvantageous".

23 January 2009: US regulators approve the Rohm and Haas merger on the condition that Dow sell off some of its assets. With the approval, Dow has until 27 January to close the merger under the terms of the agreement.

20 January 2009: Dow's general counsel makes another request for more time. Rohm and Haas general counsel turns down the request.
Rohm and Haas announces it will cut 900 jobs.

19 January 2009: Dow CEO Andrew Liveris meets with Rohm and Haas CEO Raj Gupta in Philadelphia, Pennsylvania. Liveris wants Dow to have until 30 June to close the merger. Gupta rejects the offer.

10 January 2009: Dow misses its first deadline to close the merger. For each day that Dow misses the deadline, it will owe Rohm and Haas $3.35m in late fees.

8 January 2009: European Commission approves Dow's merger with Rohm and Haas.

6 January 2009: Dow plans to pursue legal action over its failed joint venture with PIC.

2 January 2009: JP Morgan cuts its target price and 2009 earnings estimate for Dow because of pressure in the company’s basic plastics segment.

31 December 2008: Dow approaches US regulators and says it would not close the deal until 9 January.
International credit agency Fitch Ratings says it could lower the short-term credit standings of both Dow and Rohm and Haas by least a notch  following the collapse of Dow's planned K-Dow joint venture with PIC.

28 December 2008: Dow learns that the Kuwait Supreme Petroleum Council’s (SPC) reversed its earlier approval of the PIC joint venture. The deal collapses and, with it, Dow's expected $9.5bn in proceeds from the joint venture.

18 December 2008: Reports say that the Kuwaiti government will refer plans for the joint venture between Dow and PIC to the country’s top legal authority.

9 December 2008: JPMorgan slahses its profit estimates for Dow. JP Morgan says cost-reduction programmes and healthy prices in Dow's performance chemicals operations will not likely offset falling global demand and destocking.

8 December 2008: Dow announces a plan to cut 5,000 jobs, close 20 plants and temporarily close 180 others. Dow cites the severe downturn in the global economy.

2 December 2008: Liveris said his company will not look to renegotiate the terms of its pending merger with Rohm and Haas, despite falling values. Liveris also pledges that he will not become the first Dow chief executive to lower the company's dividend.

1 December 2008: Dow signs an agreement with PIC to create the K-Dow petrochemicals joint venture by 1 January. The agreement has changed, however, with PIC paying Dow $7.5bn instead of the initial $9.5bn. At the same time, the K-Dow joint venture will pay $1.5bn each to Dow and PIC.

21 November 2008: Citigroup lowers target prices and profit estimates for Dow and four other chemical majors due to massive global destocking.

29 October 2008: Shareholders of Rohm and Haas vote in favour of its merger with Dow. After merging with Dow, Rohm and Haas would retain its name and its headquarters in Philadelphia, Pennsylvania. In addition, Dow would contribute several of its specialty chemicals segments to Rohm and Haas.

27 October 2008: Dow obtains equity commitment letters from Berkshire Hathaway and the Kuwait Investment Authority (KIA). The letters provide Dow with another $4bn to finance the merger with Rohm and Haas, bringing the total to $17bn.

20 October 2008: The European Commission approves the Dow and PIC joint venture.

13 October 2008: JP Morgan lowers its earnings outlook for Dow and Rohm and Haas. JPMorgan says ultimate financing costs for the merger with Rohm and Haas are likely to rise due to the tight credit environment, while new capacities in emerging markets would likely to drive down demand for Dow’s ethylene-based products.

10 September 2008: Dow hires JP Morgan to advise on the possible divestiture of its Texas-based acrylic acid and esters operations and its North American UCAR emulsion systems specialty latex business. The proposed sell off would help address US anti-monopoly concerns over its merger with Rohm and Haas.

8 September 2008: Dow enters a term-loan agreement, under which the company would receive $13bn to finance its merger with Rohm and Haas.

29 August 2008: Dow receives a request for additional information from the US Federal Trade Commission (FTC) over its merger with Rohm and Haas.

30 July 2008: Dow and Rohm and Haas make filings with US anti-monopoly regulators, one of the initial steps of getting the merger approved.

15 July 2008: James Flitterling is named as CEO of K-Dow Petrochemical, the joint venture to be formed by Dow and PIC.

10 July 2008: Dow announces it will buy Rohm and Haas for $18.8bn. The deal comes to $78/share. Dow chief financial officer Geoffery Merszei says the merger is not contingent on Dow's pending joint venture with PIC.

7 July 2008: Dow submits a bid letter to Rohm and Haas.

source: news reports, court documents

($1 = €0.79)

For more on Dow or Rohm and Haas visit ICIS company intelligence
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By: Al Greenwood
+1 713 525 2645

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