Fees boost Dow's cost for Rohm and Haas to $78.972/share

10 March 2009 16:10  [Source: ICIS news]

HOUSTON (ICIS news)--Late fees will boost Dow Chemical's purchase price for Rohm and Haas by nearly $1/share (€0.79/share) - bringing the total to $78.972/share, a spokeswoman for Rohm and Haas said on Tuesday.

Dow had agreed to pay roughly $3.35m/day in late fees if it missed a 10 January milestone to close on the merger.

Those fees will continue ticking until Dow closes the merger on 1 April, the new deadline called for by a settlement agreement, a spokeswoman said.

Dow and Rohm and Haas reached the settlement following a lawsuit filed by Rohm and Haas.

Under the settlement, Dow will pay $78/share, the same figure called for by the merger agreement. That figure excludes late fees and assumed debt.

The merged company will take on a number of steps to free up cash for the deal.

These include laying off 3,500 employees, closing up to 15 plants and divesting assets worth $4bn.

Dow will also issue $2.5bn in preferred equity, which will be purchased by the two largest shareholders of Rohm and Haas, Paulson & Co and the Haas Family Trusts.

In addition, the Haas Family Trusts could make an investment in an additional $500m of Dow equity.

Before settling with Rohm and Haas, Dow cut its dividend by 64%, a move that will free up more money for the merger.

Shares of Dow traded at $6.33 as of 11:21 hours New York time (15:21 GMT), down 0.4%. Rohm and Haas shares traded at $77.65, up 4.93%.

($1= €0.79)

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By: Al Greenwood
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