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Dow Chemical to Acquire Rohm and Haas

Thursday, July 10, 2008

The Dow Chemical Company announced a definitive agreement to acquire Rohm and Haas Company, a major manufacturer of acrylic resins and other key raw materials for coatings, for $78 per share in cash in a deal valued at $18.8 billion.

Dow said the acquisition of Rohm and Haas will make it the world’s biggest manufacturer of specialty chemicals and advanced materials, combining the two organizations’ “best-in-class technologies, broad geographic reach, and strong industry channels to create an outstanding business portfolio with significant growth opportunities.” Dow said the acquisition represents “a decisive move in Dow’s transformation into an earnings growth company with reduced cyclicality,” adding that “Rohm and Haas provides “an excellent position in a number of industry segments that are poised for significant growth given long-term market megatrends,” most notably in the electronic-materials and coatings segments.

Rohm and Haas also has a strong presence in a number of other attractive areas such as water solutions, adhesives, personal care, biocides, and building and packaging materials, Dow said. Rohm and Haas, based in Philadelphia, reported sales of approximately $8.9 billion in 2007.

The transaction, which has been unanimously approved by the boards of directors of both companies, remains subject to approval by Rohm and Haas shareholders and regulatory authorities. The companies are targeting completion of the transaction by early 2009.

Andrew N. Liveris, Dow chairman and CEO, called the acquisition “a defining step in our transformational strategy to shape the Dow of Tomorrow—a high-value, diversified chemicals and materials company.” He said the deal will create “the largest specialty chemicals company in the United States with a leading global position in performance products and advanced materials.”

Dow said financing for the acquisition 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.

Rohm and Haas Chairman and CEO Raj L. Gupta said that by becoming a part of Dow, “we secure a brighter future and greater growth prospects for our employees, consistent with the vision of our founders to remain a high-quality supplier of innovative technology and solutions.”

Rohm and Haas’s product portfolio includes powder coatings; acrylic resins; biocides; adhesives materials; caulks and sealants; cement/concrete additives; materials for exterior insulation and finish systems (EIFS); coatings additives; and others.

Dow Chemical is a major manufacturer of basic and specialty chemical products, including coatings raw materials such as acrylic monomers; solvents; vinyl acetate monomers; acrylic, vinyl-acrylic and styrene-acrylic latexes, biocides; surfactants; epoxy resins; and other specialty materials.