Dow and Rohm and Haas announced a definitive agreement, under which Dow will acquire all outstanding shares of Rohm and Haas common stock for $78 per share in cash. The acquisition of Rohm and Haas will make Dow the world's leading specialty chemicals and advanced materials company.
According to the Midland, Mich.-based company, the transaction marks a
decisive move in its transformation into an earnings growth company with
reduced cyclicality. Last December, Dow announced a joint venture with
Petrochemical Industries Company of the State of Kuwait (PIC). With the
collective impact of these two deals, performance products and advanced
materials will represent 69 percent of Dows total sales, on a 2007 pro forma
basis, compared with 51 percent prior to these transactions.
Financing for the acquisition includes an equity investment by Berkshire
Hathaway and the Kuwait Investment Authority in the form of convertible
preferred securities for $3 billion and $1 billion respectively. Debt financing
has been committed by Citi, Merrill Lynch and Morgan Stanley, who acted as
financial advisors on the transaction.
Andrew N. Liveris, Dow chairman and CEO, said, “The acquisition of Rohm and
Haas is a defining step in our transformational strategy to shape the 'Dow of
Tomorrow' -- a high value, diversified chemicals and materials company,
creating the largest specialty chemicals company in the United States with a
leading global position in performance products and advanced materials."
According to the two companies, Rohm and Haas provides Dow with an excellent
position in a number of industry segments that are poised for significant
growth given long-term market megatrends, most notably in the electronic
materials and coatings segments. In addition to its leading platforms in these
two important segments, Rohm and Haas has a strong presence in a number of
other attractive areas such as water solutions, adhesives, personal care,
biocides, and building and packaging materials. The acquisition will unlock
value from Dow’s existing portfolio by delivering a range of innovative new
products and technologies to these high growth downstream sectors, while at the
same time expanding the product offering for sale through Dow’s own existing
Dow will establish an advanced materials business unit at Rohm and Haas’
current headquarters in Philadelphia and intends to contribute complementary
Dow businesses to Rohm and Haas’ existing portfolio, such as coatings, biocides
and personal care. The total revenue of this new unit will approach $13
billion. Dow will retain Rohm and Haas’ corporate name for this advanced
materials business unit in order to capitalize on the company’s
well-established brand value. Two Rohm and Haas directors will join the Dow
Board of Directors, to allow for the continued stewardship of Rohm and Haas’
corporate culture and assets, bringing the total size of Dow’s board to 14.
The transaction, which has been unanimously approved by the Boards of
Directors of both companies, remains subject to approval by Rohm and Haas
shareholders, customary conditions and receipt of regulatory approvals. The
companies are targeting completion of the transaction by early 2009.
Dow Acquires Rohm and Haas in $18.8 Billion Transaction
July 10, 2008