Together at last: Dow completes Rohm and Haas purchase
Chemical finally completed its $16.5 billion acquisition of flexible packaging adhesive and coating manufacturer Rohm and Haas on April 1. The former Rohm and Haas operations will become the bulk of Dow’s newly formed Advanced Materials division, a diversified business group that Dow officials estimate will generate $14 billion in annual sales. Pierre Brondeau has been named president and chief executive officer of the new unit.
Dow first proposed the purchase of Rohm and Haas in July 2008 in a strategic effort to boost its presence in specialty chemicals while spinning off its commodities business to K-Dow Petrochemicals, a $17.4 billion joint venture with Kuwait Petroleum Corp. The partnership would create the capital necessary to close the Rohm and Haas deal, but the Kuwaitis, anxious over weakening petroleum sales and a slumping economy, canceled the contract. Denied billions in cash it expected to use in the Rohm and Haas transaction, Dow then tried to delay the acquisition, triggering a lawsuit filed by Rohm and Haas. The two companies announced March 9 that they had settled outside the courtroom, just hours before the case was to go to trial.
To close the sale, Dow reduced its dividend, made plans to lay off thousands of Rohm and Haas employees and extended the terms of a one-year bridge loan to finance the purchase of Rohm and Haas to two years. Dow remains optimistic that it can pay off the bridge loan by the end of 2009 and announced it was exercising its $500 million equity option with Haas Family Trusts and would be selling former Rohm assets, including Morton Salt for more than $1.6 billion.