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Dow Chemical, Rohm & Haas reach settlement

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Dow Chemical, Midland, Mich., and Rohm & Haas, Philadelphia, reached a tentative agreement Monday regarding Dow Chemical's disputed $15.4 billion buyout of Rohm & Haas, according to USA Today. The acquisition is to be completed no later than April 1.

The settlement states that Rohm & Haas shareholders still will receive $78 per share, as well as proceeds from a daily $3 million ticking fee Dow Chemical was required to pay for not closing the acquisition after it was approved by regulators. The Haas Family Trust and Paulson & Co.—Rohm & Haas' two largest shareholders—are owed $3 billion from the deal and will receive it in the form of preferred equity securities in Dow Chemical. The rest of the deal will be settled in cash.

In July 2008, Dow Chemical planned to acquire Rohm & Haas for $78 per share to broaden its product offerings, agreeing to pay a premium of more than 70 percent for the company. However, when a $17.4 billion joint venture with Kuwait—which would have funded the Rohm & Haas acquisition—fell through, Dow Chemical pulled out and has since said the buyout would be disastrous in the current economic climate. As a result, Rohm & Haas filed suit against Dow Chemical earlier this year.

Dow Chemical plans to draw as much as $10 billion from a $12.5 billion bridge loan but also will use money from the new share issuance. Berkshire Hathaway will invest $3 billion to help Dow Chemical with the buyout, and the Kuwait Investment Authority is contributing $1 billion.

"Dow Chemical has taken the time and steps necessary to close this transaction on substantially improved financial terms to the company, despite the continuing financial and economic uncertainty facing our world," says Dow Chemical Chairman and Chief Executive Officer Andrew Liveris. "The strategic benefits of the acquisition of Rohm & Haas have never been in question; just the path to completing the deal."


3/10/2009

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