DOW
Delayed takeover of Rohm & Haas sealed / Closing on 1 April 2009 / Price unchanged, but deal restructured
 Dow-CEO Andrew Liveris (Photo: Dow) |
Dow Chemical (Midland, Michigan / USA; www.dow.com) and Rohm & Haas (Philadelphia, Pennsylvania / USA; www.rohmhaas.com) sealed their delayed merger plans on 9 March shortly before a Delaware court was due to hear Rohm & Haas’ January lawsuit against Dow for failure to complete the deal on time – see Plasteurope.com of 30.01.2009. New terms of the USD 15.3 bn transaction were negotiated behind closed doors the preceding weekend. As requested by the two partners, the court will stipulate a 1 April 2009 closing date.
The broader financial terms remain unchanged – Dow will pay stakeholders of the US speciality chemicals producer USD 78 per share. However, the conditions have been restructured so that only USD 63 per share will be paid in cash. The remaining USD 15 per share commitment will be covered by the issuance of preferred equity securities to Rohm & Haas’ two largest shareholders, the Haas and Paulson families. The Haas Family Trusts may also make a USD 500m investment in Dow’s equity.
The financing also includes USD 3 bn from US billionaire Warren Buffett’s Berkshire Hathaway fund and USD 1 bn from Kuwait Investment Authority in the form of convertible preferred equity. Dow said the equity assurances will allow it to reduce the amount it would be required to draw down from its USD 12.5 bn bridge loan, which it has renegotiated to provide a one-year extension on USD 8 bn of the total.
Dow meanwhile has revealed more details of how the merged company will look. Altogether, the workforce is being reduced by nearly 10,000. This includes 3,500 on top of the 5,000 job cuts previously announced by Dow and the 1,500 announced by Rohm & Haas. Additionally, 10-15 plants will be closed. Through a freeze on salaries for 2009, Dow also hopes to save USD 200m. Capital spending for 2009 will be slashed by half, from USD 2.3 bn to USD 1.1 bn.
At the same time, Dow said it will continue to “pursue all options” to successfully resolve what its CEO Andrew Liveris in January called “the dramatic and stunning failure” of Petrochemicals Industries Company (PIC) of Kuwait to complete the K-Dow petrochemicals joint venture. The breakdown of this deal was what drove the US chemical giant to seek to renegotiate or cancel the Rohm & Haas’ takeover – see also Plasteurope.com of 07.01.2009. Because of a contract clause, the delayed takeover will cost Dow about USD 200m more than originally planned.
The broader financial terms remain unchanged – Dow will pay stakeholders of the US speciality chemicals producer USD 78 per share. However, the conditions have been restructured so that only USD 63 per share will be paid in cash. The remaining USD 15 per share commitment will be covered by the issuance of preferred equity securities to Rohm & Haas’ two largest shareholders, the Haas and Paulson families. The Haas Family Trusts may also make a USD 500m investment in Dow’s equity.
The financing also includes USD 3 bn from US billionaire Warren Buffett’s Berkshire Hathaway fund and USD 1 bn from Kuwait Investment Authority in the form of convertible preferred equity. Dow said the equity assurances will allow it to reduce the amount it would be required to draw down from its USD 12.5 bn bridge loan, which it has renegotiated to provide a one-year extension on USD 8 bn of the total.
Dow meanwhile has revealed more details of how the merged company will look. Altogether, the workforce is being reduced by nearly 10,000. This includes 3,500 on top of the 5,000 job cuts previously announced by Dow and the 1,500 announced by Rohm & Haas. Additionally, 10-15 plants will be closed. Through a freeze on salaries for 2009, Dow also hopes to save USD 200m. Capital spending for 2009 will be slashed by half, from USD 2.3 bn to USD 1.1 bn.
At the same time, Dow said it will continue to “pursue all options” to successfully resolve what its CEO Andrew Liveris in January called “the dramatic and stunning failure” of Petrochemicals Industries Company (PIC) of Kuwait to complete the K-Dow petrochemicals joint venture. The breakdown of this deal was what drove the US chemical giant to seek to renegotiate or cancel the Rohm & Haas’ takeover – see also Plasteurope.com of 07.01.2009. Because of a contract clause, the delayed takeover will cost Dow about USD 200m more than originally planned.
10.03.2009 Plasteurope.com [213005]
Published on 10.03.2009
German version of this article...