UpdateUS Dow completes Rohm and Haas acquisition

01 April 2009 21:54  [Source: ICIS news]

Dow buys Rohm and Haas(Adds background, paragraphs 8-18. Update Dow stock price, paragraph 19)

HOUSTON (ICIS news)--US major Dow Chemical has completed on Wednesday its $78/share takeover of Rohm and Haas, meeting the deadline called for by a settlement agreement.

The acquired operations will be combined with Dow to be called Dow's Advanced Materials Division, to be headed by Pierre Brondeau, the  company said.

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

Under the settlement, the two largest shareholders of Rohm and Haas have agreed to buy $2.5bn (€1.9bn) in preferred equity to be issued by Dow, the company said.

In addition, Dow said it is exercising its option to have the Haas Family Trusts make another $500m investment in equity.

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

With the merger closed, Rohm and Haas stock will cease trading.

Dow said the merged companies will have a business portfolio of $14bn. The company has not released a total price tag for the acquisition, although one estimate places it at $15.4bn.

“The closing of this transaction strongly positions Dow for the future by transforming our business portfolio,” according to a statement by Dow CEO Andrew Liveris. “This is an exciting day for all of Dow’s stakeholders, and we are committed to delivering on a clear and measurable plan designed to meet the needs of our investors, employees, customers and suppliers, even in this current challenging macroeconomic environment."

Closing the Rohm and Haas deal will start a new surge of activity within Dow, as the company sells off businesses, lays off workers and divests plants - all part of a plan to retire a $12.5bn bridge loan by the end of the year.

In all, Dow plans to raise $4.3bn from divestments and achieve $1.3bn in synergies, the company said.

The merged company will lay off about 3,500 additional employees, mostly from Rohm and Haas, Liveris said at the time of the settlement. In addition, the merged company will close 10-15 plants and consolidate six research-and development centres.

Dow could raise more money by selling its 45% stake in TRN, a Dutch petroleum refining partnership with energy giant Total, the company said.

Dow may also sell some equity stakes in olefins and derivatives ventures in South East Asia, the company said. Dow has not identified the assets involved but has joint ventures in Malaysia (Optimal) and Thailand (with Siam Cement).

Also, bids have been submitted for the Rohm and Haas Morton salt business, Dow said.

Meanwhile, Dow is in talks to shed the basic businesses that it intended to spin off into its failed joint venture with Kuwait's Petrochemicals Industries Co (PIC).

Dow will sell more businesses to comply with US antimonopoly regulators. Assets to be sold include the following:

  • An acrylic monomer plant in Clear Lake, Texas.
  • Acrylic polymer operations in St Charles, Louisiana.
  • An acrylic polymer plant in Alsip, Illinois.
  • An acrylic polymer plant in Torrance, California.
  • An acrylic monomer research-and-development group in South Charleston, West Virginia.
  • An acrylic latex polymer research-and-development group in Cary, North Carolina.

Shares of Dow traded at $8.65 as of 15:23 hours New York time (19:23 GMT), up 2.61%.

($1 = €0.75)

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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