Rohm and Haas investors list Dow's options; CV Therapeutics rejects Astellas bid; GM shares plummet

By Cristal Cody

Tupelo, Miss., Feb. 20 - A shareholder of Rohm and Haas Co. expressed support on Friday to close the $15.4 billion acquisition of the company by the Dow Chemical Co., but an analyst told Prospect News that he expects it will take court action to close the deal.

Also on Friday, CV Therapeutics, Inc. on Friday rejected the $16.00-a-share takeover offer from Astellas Pharma Inc.

Meanwhile, shares of General Motors Corp. hit a low on Friday that had not been seen since the 1930s as its subsidiary Saab sought court protection in Sweden from creditors.

On Wall Street, the Dow Jones Industrial Average continued to fall Friday on fears that the federal government will nationalize Citigroup Inc. and Bank of America Corp. The Dow regained some ground after the White House denied the rumors.

The blue chips lost 100.28 points, or 1.34%, to close Friday at 7,365.67 after hitting a six-year low a day earlier.

Bill O'Grady, chief markets strategist at Confluence Investment Management in St. Louis, told Prospect News on Friday that the market is waiting on president Barack Obama's next move.

"The Dow was down substantially earlier. It's actually recovered to some extent with some comments coming out suggesting the [federal] administration is going to [release] more detail on the Treasury bailout package on the banks," he said. "It really does show how sensitive the market's become to policy issues."

The broader indexes also lost ground on Friday.

The S&P 500 index fell by 8.89 points, or 1.14%, to close at 770.05, and the Nasdaq Composite index dropped 1.59 points, or 0.11%, to 1,441.23.

Rohm and Haas options

Hotchkis and Wiley Capital Management, a Los Angeles-based investment management firm, said in a letter sent to Rohm and Haas that Dow Chemical has the capabilities to close the acquisition.

"Dow has a variety of options available to honor the agreement on its original terms," the firm said. "These options include drawing down the bridge loan, divesting certain assets, obtaining long-term debt financing and issuing equity. While the current financial crisis has made financing terms less favorable than they have been in the past, options are nevertheless available."

Dow representatives did not return calls for comment.

Midland, Mich.-based Dow Chemical, which makes and sells chemicals, plastics and other products, was expected to close the merger on Jan. 27.

Philadelphia-based Rohm and Haas makes specialty materials for a variety of industries.

A trial for Rohm and Haas' lawsuit to force Dow to go through with the merger is scheduled for March 9.

An analyst told Prospect News that he expects it will take a "court order" to force Dow into action.

Rohm and Haas shares lost $1.31, or 2.29%, to close at $56.02 on Friday.

Dow's stock dropped a dime, or 1.22%, to $8.10.

CV Therapeutics rejects bid

CV Therapeutics, a Palo Alto, Calif.-based biopharmaceutical company, said its board determined that Astellas' offer significantly undervalues the company.

CV's board said it rejected the same offer on Nov. 21 when the Tokyo-based pharmaceutical manufacturer approached the company privately before making the bid public in January.

Shares of CV Therapeutics rose 51 cents, or 3.40%, to close at $15.52 on Friday.

"CV Therapeutics has a strategic plan in place which we believe will enhance shareholder value," Louis G. Lange, chairman and chief executive officer of CV Therapeutics, said in a statement. "This strong record of product approvals, which exceeds that of many pharma companies over the last several years, has allowed the company to establish a solid cash position."

Analysts predicted that CV Therapeutics would reject Astellas' offer and told Prospect News that the board would not consider a bid below $19 a share.

GM's depression

General Motors' stock fell as low as $1.52 before rebounding slightly. Shares closed down 23 cents, or 11.50%, to $1.77 on Friday.

The Detroit automaker said earlier this week it will need an additional $30 billion in bailout funds to prevent bankruptcy.

Saab, General Motor's subsidiary in Sweden, also sought court protection from creditors on Friday to start the process for a sale.

Mentioned in this article:

CV Therapeutics, Inc. Nasdaq: CVTX

Dow Chemical Co. NYSE: DOW

General Motors Corp. NYSE: GM

Rohm and Haas Co. NYSE: ROH

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