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%.
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