Rohm and Haas filled legal papers against Dow in January when the prospective buyer failed to close the transaction on the agreed date citing unacceptable funding uncertainties.
Terms of the reworked deal
Now the $15.3bn deal is back on track bringing the court battle to an end. Rohm & Haas’s two largest shareholders, the Haas Family Trust and Paulson and Co., have agreed to buy $2.5bn in preferred equity in Dow.
The shareholders have also made an additional $500m available in common stock if Dow needs it to cushion its debt load.
All the other shareholders will receive $78 per share when the deal is closed. This is the same price that was agreed in July before the financial crisis hit.
Both the slump in chemical demand that followed and the loss of a $17.4bn joint venture with Kuwait’s state-run Petrochemical Industries Company (PIC) in December put Dow’s financial capacity to complete the Rohm & Haas deal in doubt.
Dow says deal is financially sound
With the new agreement Dow claims the acquisition, which must now be closed no later than April 1, no longer stands in the way of financial stability.
“The restructuring of the terms of the transaction allows Dow to maintain financial flexibility as we proceed to implement our strategy in a way that realizes the original promise of this acquisition,” said Andrew N. Liveris, Dow chairman and CEO.
Liveris had hailed the acquisition as ‘game changing’ when it was originally announced but events that followed raised the possibility that the deal could be game changing in ways that Dow had not envisaged.
Now Liveris says the new terms of the deal frees Dow from the possibility of having to sell assets to protect the financial stability of the company.
Reuter’s quoted Liveris as saying yesterday that the company can retain ‘key assets’ such as Dow Corning, which sells silicone products to cosmetics manufacturers.