Processing Magazine

Dow settlement reached with Rohm & Haas

March 11, 2009
The takeover that went from an absolute-must to nearly a bust for Dow Chemical will go forward, but the final price for Rohm & Haas was steep and the nation''s largest chemical company must now mesh and grow its businesses amid the broken economy. The settlement was announced in a Delaware court, where a judge had pushed both parties to reach an accord, reported by the Associated Press. In a concession, the Haas family’s trust and Paulson & Co. agreed to take a $2.5 billion stake in preferred shares issued by Dow. In addition, the Haas family will make a future investment of $500 million at Dow''s option. While the debt load for Dow was reduced in the new deal, the final price for Rohm & Haas rose by more than $1 billion when fees are included. Andrew Liveris, Dow''s chairman and chief executive, said the new terms are "substantially improved." Dow had initially put up $78 per share, or $15.4 billion, when the deal was announced last July. With additional fees, the final price will be about $79 per share, or $16.5 billlion. As a first step, Dow said it would lay off thousands of Rohm''s workers. The move, along with others, is designed to save cash as the company works to pay down a $10 billion loan that becomes much more expensive after a year. Rohm & Haas makes specialty chemicals that go into electronics, building materials and medicines, all sectors that have been afflicted by the economic downturn. Dow agreed to pay $78 per share for Rohm, plus fees. Dow said it would cut 3,500 jobs at Rohm & Haas, which means that including 900 layoffs announced earlier this year, about 25 percent of all employees at the company will lose their jobs. Besides layoffs, CEO Andrew Liveris told analysts that more plants would be closed and that redundant operations would be eliminated. Dow has already said it would close 20 plants. For Liveris, the work to integrate Rohm & Haas -- a company he previously called a "jewel" -- has just begun.