Posted by: Lawyer Sanders | July 10, 2008

Dow Chemical acquires rival Rohm and Haas in $15 billion deal.

Dow Chemical Co. will buy rival chemicals maker Rohm and Haas Co. for more than $15 billion.  The $78 per-share deal is a 74 percent premium to Philadelphia-based Rohm and Haas’s closing share price of $44.83 on July 9, 2008.   Rohm and Haas shares soared more than 65 percent, or $29.47, to $74.25 in premarket trading.

 The acquisition is part of an effort by Dow to move into the specialty chemicals market, which may provide Dow with a buffer against ups and downs in basic chemical sales.   The deal has been approved by both companies’ boards. It is pending approval by Rohm and Haas shareholders and regulatory approvals.

Dow’s acquisition of Rohm and Haas will make Dow the one of the world’s leading specialty chemicals and advanced materials company.    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 Dow’s 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.   Citi, Merrill Lynch and Morgan Stanley  acted as financial advisors on the transaction.

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