dows bid for rohm and haas

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1) Introduction
The case presents an American company Dow, producer of commodity chemicals, who is in the final stages of acquiring another company Rohm and Haas. Dow’s CEO has been working for four years to transform Dow from a producer of low-value, highly cyclical commodity chemicals to a producer of high-value, specialty chemicals and advanced materials. Rohm is a perfect match for Dow in respect of the strategic and financial perspective. Dow is also pursuing another key deal with Kuwait’s Petrochemical Industries Company (PIC) that was supposed to generate $7 billion cash net of tax which could be used to finance acquisition of specialty chemical maker Rohm & Haas for $18.8 billion all cash deal. However, by late 2008, a sever financial crisis gripped the US markets, causing a substantial decline in asset values. This financial crisis stretched across the entire globe, and the Kuwait based PIC terminated the joint venture with Dow in December 2008. To make matters worse, Dow reported a fourth quarter loss of $1.6 billion. Due to deteriorating market conditions and the credit market freezing up, Dow attempted to back out of its acquisition of Rohm & Haas. In response, Rohm & Haas approached the court to force Dow to complete the the terms of their deal.
2) Why does Dow want to acquire Rohm and Haas?
Rohm and Haas would be a strong operational and strategic fit for Dow. This acquisition would bring synergies as well as benefits in products and technologies, broad geographic reach, and strong industry channels. Andrew Liveris described the deal as a “jewel… that matched Dow‘s strategy perectly.” Rohm & Haas’ presence in the global market will provide Dow with an expanded network into emerging markets, producing important sources of revenues, while the synergies would create an outstanding business portfolio with diversified products and significant growth opportunities. Rohm & Haas is also backed by a strong and experienced leadership team with

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