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Thursday, July 10, 2008

Dow Chemical to Acquire Rohm and Haas

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Dow Chemical will buy Rohm & Haas, the Philadelphia, Penn.-based specialty chemicals maker for $18.8 billion.

The $78-per-share offer is a whopping 74% premium to the $44.83 closing price of Rohm and Haas on Wednesday.

The $18.8 billion figure includes Rohm and Haas’ outstanding debt. The deal is worth about $15.29 billion when debt is subtracted.

The deal will be financed by Berkshire Hathaway and the Kuwait Investment Authority. Once the deal closes, Berkshire Hathaway will become the largest shareholder in Dow Chemical. The company created from the deal will be the largest specialty chemicals and advanced materials company in the world.

The deal has already been approved by the boards of both companies, but is pending regulatory approvals and support from Rohm and Haas shareholders.

Debt financing for the deal will be provided by Citi (C), Merrill Lynch (MER) and Morgan Stanley (MS)--who also acted as financial advisers on the transaction.

Dow said it will establish an advanced materials business division at Rohm and Haas’ current headquarters in Philadelphia, according to a company press release. This division will produce things like coatings, biocides and personal care. The revenue of this new division will approach $13 billion, and will retain the Rohm and Haas’ corporate name.

Two directors at Rohm and Haas will join the Dow Board bringing the total size of Dow’s Board of Directors to 14.

Dow had sales of $54 billion last year, and has 46,000 employees worldwide. Rohm and Haas had sales of $8.9 billion in 2007.