By Lisa Kerner
Charlotte, N.C., July 10 - Dow Chemical Co. agreed to acquire Rohm & Haas Co. for $78 per share in cash, or about $15.2 billion, it was announced on Thursday.
The acquisition will make Dow the world's leading specialty chemicals and advanced materials company as well as establish Dow as an earnings-growth company, a Dow news release said.
Both companies' boards of directors have unanimously approved the transaction, which is expected to close by early 2009 subject to Rohm & Haas shareholder approval.
Haas family trusts, which collectively control about 33% of Rohm & Haas outstanding stock, are in support of the definitive merger agreement, according to a Rohm & Haas news release.
Dow said it expects the transaction to be meaningfully accretive to earnings in the second year following completion, with pre-tax annual cost synergies expected to be at least $800 million per year.
Two Rohm & Haas directors will join Dow's expanded 14-member board of directors.
The merger agreement contains termination rights for both Dow and Rohm & Haas, with termination fees of $600 million and $750 million payable by the respective companies.
Dow will establish a new advanced materials business unit at Rohm & Haas' Philadelphia location with expected revenue of $13 billion. Plans are to contribute complementary Dow businesses to the company's existing portfolio, such as coatings, biocides and personal care.
Financing for the deal 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, Dow noted.
Citi, Merrill Lynch and Morgan Stanley committed debt financing.
"Rohm & Haas brings us access to new and exciting technologies and offers an extended reach into emerging geographies, all of which are highly complementary to Dow's existing platforms and value growth priorities," Dow chairman and chief executive officer Andrew N. Liveris stated in the release.
Liveris called the addition of Rohm and Haas' portfolio as "game-changing" for the Midland, Mich., diversified chemical company.
Rohm & Haas is a global specialty materials company based in Philadelphia. Its portfolio includes specialty materials, electronic materials and salt.
| Acquirer: | Dow Chemical Co.
|
| Target: | Rohm & Haas Co.
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| Announcement date: | July 10
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| Transaction total: | $15.2 billion
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| Price per share: | $78.00
|
| Termination fee: | $600 million, $750 million
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| Expected closing: | Early 2009
|
| Stock price of target: | NYSE: ROH: $44.83 on July 9
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