Rohm & Haas shares slide on Dow delay; Exelon set to win NRG; Time Warner Cable spinoff ahead

By Cristal Cody

New York, Jan. 7 - Shares of Rohm & Haas Co. continued a two-day loss Wednesday as concerns take hold that the acquisition by Dow Chemical Co. will fall through.

In hostile takeover attempts, though, Wednesday was a good day for Exelon Corp. as it moved within reach of gaining a majority of outstanding shares of NRG Energy Inc.

Looking ahead to other deals, Time Warner Cable Inc. expects to complete its spinoff from controlling shareholder Time Warner Inc. early this year, the company told Prospect News on Wednesday.

Meanwhile, hump day was hard to swallow on Wall Street as all the major indexes fell more than 2%.

The Dow Jones Industrial Average shed 245.40 points, or 2.72%, to finish at 8,769.70.

Likewise, the S&P 500 index fell 28.05, or 3%, to 906.65, and the Nasdaq Composite index fell 53.32, or 3.23%, to 1,599.06.

Dow carefree on closing date

Dow Chemical may go past the deadline to acquire Rohm & Haas and pay the $100 million-a-month fee if the $15.3 billion deal is not completed by Saturday.

A Dow spokesman did not immediately return a call for comment.

Dow is expected to receive regulatory approvals from U.S. and E.U. agencies this week.

The company said Tuesday it plans to take legal action against Petrochemical Industries Co. in Kuwait for backing out of a planned joint venture. Dow had planned to use part of the proceeds from the $17.4 billion venture to finance the Rohm & Haas acquisition.

The merger agreement includes a ticking fee of about $3 million for every day beyond the deadline that the $78.00-a-share cash deal does not close.

Rohm & Haas shares fell $1.54, or 2.5%, to close at $60.00 Wednesday on a two-day loss of more than 5%.

Dow shares rose 3 cents, or 0.19%, to close at $16.08.

Exelon comes out on top

Exelon made strong headway into its unsolicited takeover of NRG Energy with more than 45.6% of shares tendered, the company said Wednesday.

Exelon extended the exchange offer of 0.485 shares of Exelon stock for each share of NRG stock to Feb. 25.

"Today's initial results exceed our expectations by a considerable margin and reflect the desire of NRG shareholders to have all parties move forward constructively," John Rowe, Exelon's chairman and chief executive officer, said in a statement. "We are encouraged by the initial support we've received from NRG shareholders, and the extension will provide further opportunity for us to review and discuss the merits of the proposed combination with relevant stakeholders."

NRG said in a statement Wednesday that it has received considerable feedback from shareholders over the hostile offer and remains against the deal.

"We take very seriously the views of our shareholders and appreciate the support that our shareholders have provided for the NRG board's decision that the current Exelon offer is highly conditional and significantly undervalues NRG," the company said. "As always, we remain open to being a buyer or a seller at an appropriate value that compensates for the value and risks of the transaction."

Exelon brought the offer to stockholders in November after the company's board twice rejected it.

While investors and NRG hoped for a bigger bid, the current offer looks set, analysts said Wednesday.

"It does seem more than any of us expected and more than Exelon expected," said Angie Storozynski, an analyst with Macquarie Research Equities. "They managed to convince almost 50% of NRG shareholders without increasing the share range ratio. It's a little bit of a disappointment for [those] who thought Exelon would fight for the name and increase the offer."

The offer is fair and Exelon would give NRG strong support, she said.

Exelon filed regulatory applications and notices in December with the Federal Energy Regulatory Commission, the U.S. Department of Justice and the Federal Trade Commission of its plans to acquire NRG.

The Federal Energy Regulatory Commission has an initial 180 days to review an application with the option to extend the review another 180 days.

"The probability has gone up dramatically that this deal will get done," a market analyst who spoke on background said Wednesday.

"With almost 46% of the shareholders tendering their shares, there's very little to no reason for Exelon to up the ante," the analyst said. "There are enough people in the market that were hanging out and waiting to see a bigger offer before they tendered their shares and now they are resigned to accepting a deal than having no deal."

Exelon shares lost $2.20, or 3.83%, to close Wednesday at $55.22.

NRG's stock fell $1.24, or 5.04%, to $23.37.

Time Warner Cable spinoff in early '09

Time Warner Cable is awaiting approval of its spinoff from the Federal Communications Commission, the final regulatory hurdle, company spokesman Justin Venech said.

"We are expecting the separation to be complete sometime in early 2009," he said.

Shareholders of controlling owner Time Warner will vote Jan. 16 on a reverse stock split to reduce the number of outstanding shares and boost the company's share price once Time Warner Cable is a stand-alone publicly traded company.

"Time Warner owns about 84% of us. As part of this deal, they will no longer have an ownership stake and we will be completely public," Venech said.

Time Warner said Wednesday it expects to take a $25 billion fourth-quarter charge to write down the value of the AOL, cable and publishing arms of the company.

Time Warner Cable accounts for $15 billion of the charge, according to the company.

Time Warner Cable shares fell $1.09, or 4.81%, to $21.56 in trading Wednesday.

Time Warner shares fell 69 cents, or 6.28%, to $10.29.

Mentioned in this article:

Dow Chemical Co. NYSE: DOW

Exelon Corp. NYSE: EXC

NRG Energy Inc. NYSE: NRG

Rohm & Haas Co. NYSE: ROH

Time Warner Cable Inc. NYSE: TWC

Time Warner Inc. NYSE: TWX

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