Rohm & Haas Gets Trial Over Dow Deal


Rohm and Haas Co. has obtained a Delaware courts permission for an expedited trial March 9 in its lawsuit to compel Dow Chemical to close on its acquisition of the specialty chemicals manufacturer.

The trial is scheduled to take place in Georgetown, Del., and is expected to conclude that week, Rohm and Haas announced late yesterday.

Philadelphia-based Rohm and Haas filed its complaint Monday with the Court of Chancery of the State of Delaware to enforce the agreement with Dow entered on July 10. Dow was required to close the transaction within two business days of receiving all regulatory approvals, according to the agreement. The last of the required regulatory approvals to close the deal was received from the U.S. Federal Trade Commission on Friday, Jan. 23.

On Monday, Dow confirmed it had informed Rohm and Haas it would not close the proposed acquisition on or before Jan. 27. A ticking fee began Jan. 10, under which Dow would pay $100 million a month to Rohm and Haas until the merger closes. In its suit, Rohm and Haas argued that the ticking fee doesnt give Dow an option to delay the mergers closing at will by paying the fee.

In July, the companies announced Midland, Mich.-based Dows plan to acquire Rohm and Haas Co. for $18.8 billion, or $78 per share in cash. Dow said it planned to contribute complementary businesses, including biocides, to the existing portfolio of Rohm and Haas, which would retain its Philadelphia headquarters and continue to do business under its own name. Increased purchasing power for raw materials was considered a key cost savings under the deal. Dow and Rohm and Haas each have announced job cuts and other cost-cutting measures since the July announcement.

Dow said recent material developments had created unacceptable uncertainties on the funding and economics of the combined businesses. This assessment is based on several macro-economic factors such as the continued crisis in global financial and credit markets combined with the dramatic and stunning failure of Petrochemicals Industries Company of Kuwait to fulfill its obligation to complete the formation of the K-Dow joint venture in late December 2008, the company said in a statement.

Our long term strategy remains unchanged and the proposed acquisition of Rohm and Haas is consistent with this strategy, said Andrew Liveris, Dow chairman and CEO, in a statement issued Monday. The company said it remains interested in discussions to find a solution to complete the Rohm and Haas acquisition, but that recent events have made closing untenable at this time. The world has changed significantly, and we still do not see the bottom of this unprecedented demand destruction which only accelerated through the fourth quarter and brought December operating rates to historic lows, Liveris continued.

In its lawsuit filing, Rohm and Haas said Dows failure close the merger on schedule is subjecting the companys business to intolerable uncertainty, affecting not only Rohm and Haas and its stockholders, but also employees, customers, suppliers and other persons or entities doing business with Rohm and Haas. The longer that this uncertainty about the merger continues, the more likely it is that Rohm and Haass business will suffer – for example, by losing employees, customers and suppliers.

Dows lube-related products include biocides, hydraulic fluids, ethanolamines, glycols, surfactants and oxygenated solvents. Rohm and Haas makes specialty amines used as building blocks or components in lubricant additives, and metalworking fluid microbiocides and fungicides, among many other products.

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