Midland, Michigan -- Dow Chemical Co. is to finalise its purchase of Rohm and Haas by 1 April 2009, on "substantially improved financial terms," following renegotiation with Rohm and Haas and shareholders, said Dow chairman and ceo Andrew Liveris, in a 9 March teleconference.
This agreement also resolves the lawsuit started by Rohm and Haas against Dow on 26 Jan 2009, when Dow said it could not complete the previously agreed acquisition on time, a 9 March Dow statement indicated.
The acquisition is a "vital step in completing Dow's transformation into a group with more focus on advanced materials, said Liveris.
Under the agreement, Rohm and Haas' two largest shareholders will buy $2500 million of equity issued by Dow. Also, one shareholder, the Haas Family Trusts, has agreed that at Dow's option, they will invest in an extra $500 million of Dow's equity.
"These equity investments substantially reduce the debt financing required to fund the acquisition," said Dow. The company will pay the equivalent of $63 per share in cash, and $15 per share in face value of preferred equity securities.
Dow will fund the deal through proceeds from issuing equity. Financing for the acquisition also includes equity investments of $3000 million by Berkshire Hathaway and $1000 million by the Kuwait Investment Authority (KIA) as convertible preferred equity.
Dow said the deal "creates the world's leading speciality chemicals and advanced materials company." The overlap in polyurethanes is minor, with Dow having a major polyurethanes raw materials and systems business, and Rohm and Haas having some polyurethanes in its adhesives and coatings units.