MIDLAND, MI - The Dow Chemical Co. and Rohm and Haas have announced a definitive agreement under which Dow will acquire Rohm and Haas for an estimated $15.4 billion. Dow will purchase all outstanding shares of Rohm and Haas common stock for $78 per share in cash. 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.

 

The transaction marks a decisive move in Dow's transformation into an earnings growth company with reduced cyclicality. Last December, Dow announced a joint venture with Petrochemical Industries Co. of the State of Kuwait (PIC). With the collective impact of these two deals, performance products and advanced materials will represent 69 percent of Dow's total sales, on a 2007 pro forma basis, compared with 51 percent prior to these transactions.

 

Andrew N. Liveris, Dow chairman and CEO, commented, "The acquisition of Rohm and Haas is a defining step in our transformational strategy to shape the 'Dow of Tomorrow,' a high-value, diversified chemicals and materials company, creating the largest specialty chemicals company in the United States with a leading global position in performance products and advanced materials."

 

Rohm and Haas provides Dow with an excellent position in a number of industry segments, most notably in the electronic materials and coatings segments. In addition to its platforms in these two segments, Rohm and Haas has a strong presence in a number of other areas such as water solutions, adhesives, personal care, biocides, and building and packaging materials.

 

Dow will establish an advanced materials business unit at Rohm and Haas' current headquarters in Philadelphia and intends to contribute complementary Dow businesses to Rohm and Haas' existing portfolio, such as coatings, biocides and personal care. The total revenue of this new unit will approach $13 billion. Dow will retain Rohm and Haas' corporate name for this business unit. Two Rohm and Haas directors will join the Dow Board of Directors, to allow for the continued stewardship of Rohm and Haas' corporate culture and assets, bringing the total size of Dow's board to 14.

 

The transaction, which has been unanimously approved by the Boards of Directors of both companies, remains subject to approval by Rohm and Haas shareholders, customary conditions and receipt of regulatory approvals. The companies are targeting completion of the transaction by early 2009.