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Dow Chemical, Rohm & Haas reach agreement to close merger
By Lisa Kerner
Charlotte, N.C., March 9 - Dow Chemical Co. and Rohm & Haas Co. announced they reached an agreement that will enable Dow to complete its acquisition of Rohm & Haas by April 1.
Under the agreement, Rohm & Haas' two largest shareholders will purchase $2.5 billion in face value of perpetual preferred equity issued by Dow.
One of the shareholders, the Haas Family Trusts, agreed that at Dow's option, it will make an investment in an additional $500 million of Dow's equity.
The equity investments "substantially" reduce the debt financing required to fund the acquisition, said Dow. The company restructured the transaction to pay the equivalent of $63 per share in cash and $15 per share in face value of the preferreds.
Dow said it will use the proceeds from the equity issuances to reduce the amount it would have been required to draw down from its $12.5 billion bridge loan.
The financing for the acquisition also includes equity investments of $3 billion by Berkshire Hathaway Inc. and $1 billion by the Kuwait Investment Authority in the form of convertible preferred equity.
The agreement also resolves pending litigation brought by Rohm & Haas against Dow in January seeking to force Dow to complete its $78-per-share acquisition under the companies' July 10, 2008 merger agreement.
Dow, a diversified chemical company based in Midland, Mich., had announced it could not complete the acquisition by Jan. 27 as required under the agreement due to market conditions and the failure of Petrochemicals Industries Co. of Kuwait to complete the K-Dow joint venture.
Rohm & Haas is a Philadelphia-based specialty materials company.
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