The Dow Chemical Co. announced today that it has reached agreements with Rohm and Haas and certain of its shareholders that permit Dow to close the acquisition of Rohm and Haas on substantially altered financial terms by April 1, 2009. Today's agreement resolves the litigation initiated by Rohm and Haas against Dow on January 26, 2009.
Dow will host a teleconference for investors at 5:00 p.m. EDT to provide additional detail and context around the terms of today's settlement announcement.
"Dow has taken the time and steps necessary to close this transaction on substantially improved financial terms to the company, despite the continuing financial and economic uncertainty facing our world,” said Dow Chairman and CEO Andrew N. Liveris. “The strategic benefits of the acquisition of Rohm and Haas have never been in question; just the path to completing the deal."
As part of today's agreement, Rohm and Haas's two largest shareholders have agreed to purchase $2.5 billion in face value of perpetual preferred equity issued by Dow. In addition, one of the shareholders, the Haas Family Trusts, has agreed to, at Dow’s option, make an investment in an additional $500 million of Dow's equity. These equity investments substantially reduce the debt financing required to fund the acquisition; Dow has restructured the transaction to essentially pay the equivalent of $63 per share in cash, and $15 per share in face value of preferred equity securities.
To fund the acquisition of Rohm and Haas, Dow will use the proceeds from the equity issuances to reduce the amount it would otherwise be required to draw down from the $12.5 billion bridge loan, which was renegotiated last week to provide a one-year extension on $8 billion of the total loan. The financing for the acquisition also includes equity investments of $3 billion by Berkshire Hathaway and $1 billion by the Kuwait Investment Authority (KIA) in the form of convertible preferred equity.
For more information, visitwww.dow.com.
Dow Reaches Agreement to Close Rohm and Haas Acquisition (3/10/09)
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