Dow Chem buys Rohm & Haas for $19 b
Dow Chemical Company, the biggest US chemical maker, agreed to buy Rohm & Haas for about $18.8 billion.
By Agencies |
NEW YORK: Dow Chemical Company, the biggest US chemical maker, agreed to buy Rohm & Haas for about $18.8 billion, reducing its dependence on less profitable products and increasing sales of paint ingredients and adhesives.
Rohm & Haas investors will receive $78 in cash for each share they hold, Midland, Michigan-based Dow Chemical said on Thursday. The price is 74 per cent higher than Rohm & Haas��� closing price on Wednesday. Financing for the deal includes equity investments of $3 billion by Berkshire Hathaway and $1 billion by the Kuwait Investment Authority, the company said.
Chief executive Andrew Liveris said in an interview that Dow faces a ���margin squeeze��� as rising oil prices cut profits from sales of polyethylene and Sytrofoam. The acquisition of Rohm & Haas, the biggest in Dow���s 101-year history, will start to boost profits ���meaningfully��� two years after it���s completed, the company said.
���This deal uses up much of Dow���s firepower,��� Martin Evans, an analyst at Cazenove in London, said in a report. ���The premium is high ��� as is often the case when chemical assets are acquired ��� and is a necessary part of their transformation away from commodity exposures.��� The purchase exceeds the $12 billion Dow paid to acquire Union Carbide in 1999.
Rohm & Haas, based in Philadelphia, is the world���s largest producer of acrylic paint ingredients and also makes chemicals used in adhesives, packaging materials and personal care products. Dow said the unit that will include Rohm & Haas��� business will have annual revenue of about $13 billion.
The purchase will have pretax cost synergies of at least $800 million per year from increased purchasing power for raw materials, supply chain improvements and the elimination of redundant corporate services and governance, Dow said. ���We only ever had two or three companies in our vista that made sense for us,��� Liveris said on Thursday. ���And our patience and our discipline, the wait for the right moment and the right time for the right property, when it becomes available you make the deal happen.���
Rohm & Haas investors will receive $78 in cash for each share they hold, Midland, Michigan-based Dow Chemical said on Thursday. The price is 74 per cent higher than Rohm & Haas��� closing price on Wednesday. Financing for the deal includes equity investments of $3 billion by Berkshire Hathaway and $1 billion by the Kuwait Investment Authority, the company said.
Chief executive Andrew Liveris said in an interview that Dow faces a ���margin squeeze��� as rising oil prices cut profits from sales of polyethylene and Sytrofoam. The acquisition of Rohm & Haas, the biggest in Dow���s 101-year history, will start to boost profits ���meaningfully��� two years after it���s completed, the company said.
���This deal uses up much of Dow���s firepower,��� Martin Evans, an analyst at Cazenove in London, said in a report. ���The premium is high ��� as is often the case when chemical assets are acquired ��� and is a necessary part of their transformation away from commodity exposures.��� The purchase exceeds the $12 billion Dow paid to acquire Union Carbide in 1999.
Rohm & Haas, based in Philadelphia, is the world���s largest producer of acrylic paint ingredients and also makes chemicals used in adhesives, packaging materials and personal care products. Dow said the unit that will include Rohm & Haas��� business will have annual revenue of about $13 billion.
The purchase will have pretax cost synergies of at least $800 million per year from increased purchasing power for raw materials, supply chain improvements and the elimination of redundant corporate services and governance, Dow said. ���We only ever had two or three companies in our vista that made sense for us,��� Liveris said on Thursday. ���And our patience and our discipline, the wait for the right moment and the right time for the right property, when it becomes available you make the deal happen.���
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