Posted by: Lawyer Sanders | March 20, 2009

Environmental lawyer Sanders says Dow Chemical’s acquisition of Rohm and Haas is back on track.

The Dow Chemical Company recently announced that it has reached agreements with Rohm and Haas and certain of its shareholders that allow Dow to close the acquisition on substantially altered financial terms by April 1, 2009.    

 

Dow’s acquisition of Rohm and Haas creates the world’s leading specialty chemicals and advanced materials company, combining the two organizations’ best-in-class technologies, broad geographic reach and strong industry channels to create an outstanding business portfolio with significant long-term growth opportunities.

 

As part of the agreement, Rohm and Haas’s two largest shareholders have agreed to purchase $2.5 billion in face value of perpetual preferred equity issued by Dow.  In addition, one of the shareholders, the Haas Family Trusts has agreed that at Dow’s option, they will make an investment in an additional $500 million of Dow’s equity.  This is a remarkable show of good faith by the Haas Family Trusts in the deal and should be applauded.

 

These equity investments substantially reduce the debt financing required to fund the acquisition, Dow has restructured the transaction to essentially pay the equivalent of $63 per share in cash, and $15 per share in face value of preferred equity securities.

 

Dow plans to divest a number of Dow and Rohm and Haas business units.  DOW plans to sell:

 

1.            Dow’s 45 percent stake in Total Raffinaderij Nederland NV (TRN), the Dutch petroleum refining partnership with Total Group. The sale process is underway;

2.            Some of Dow’s equity stakes in its olefins and derivatives business in SE Asia. Preliminary discussions with the relevant parties have already begun; and

3.            Morton Salt, a division of Rohm and Haas, contingent upon the closing of the proposed acquisition of Rohm and Haas by Dow. Interested parties have submitted bids, and Dow will evaluate these bids as appropriate over the course of the coming weeks to determine timing of the sale process.

We will be cleosely watching this deal progress over the coming weeks. 

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