Dows bid on Rohm and Haas
Corporate Finance case 2
Dow’s Bid for Rohm and Haas
Justin Overtoom 6132111
Rutger Go 10782923
Binghong Cheng 10824588
Xianjing Cai 10874089
23-02-2015Introduction
Dow started as a manufacturer of commercial bleach in 1897, and was founded by Herbert Dow. He merged his company in 1900 with Midland Chemical, which lead to diversification of his portfolio to agricultural and food products. In 1912, Dow started to pay dividends every quarter without any reductions or interruptions. By doing so, they were the only Fortune 200 firm that established these figures.
Dow became a major player in the M&a field, since they acquired between 1983 and 2007 95 business, took stakes in 58 firms and divested 166 businesses.
In 2006, Dow’s CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy, which consisted of two pillars. One was pursuing an asset light approach to its commodity business. In order to do so, he signed a JV agreement with a subsidiary of the Kuwait Petroleum Company, named Petroleum Industries Company. Dow and PIC signed a Memorandum of Understanding, which generated Dow a $7.2 billion after tax revenues.
Second, Mr. Liveris wanted to build a high-growth and high-value added performance business. In order to achieve this objective, Dow agreed to purchase Rohm and Haas. This acquisition had the purpose for Dow to become a producer of high-value chemicals and advanced materials.
Why does Dow want to buy Rohm and Haas?
As mentioned in the introduction, CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy. This included becoming a high growth and high-value added producer of specialty chemicals, with less cyclicality. Rohm and Haas fitted the picture perfectly, since they were an advanced material and specialty chemicals company, operating in 27 countries. Besides the interesting company profile description, there were several other reasons why Dow was interested in the Rohm and Haas company.
Most important reason was that the
Dow’s Bid for Rohm and Haas
Justin Overtoom 6132111
Rutger Go 10782923
Binghong Cheng 10824588
Xianjing Cai 10874089
23-02-2015Introduction
Dow started as a manufacturer of commercial bleach in 1897, and was founded by Herbert Dow. He merged his company in 1900 with Midland Chemical, which lead to diversification of his portfolio to agricultural and food products. In 1912, Dow started to pay dividends every quarter without any reductions or interruptions. By doing so, they were the only Fortune 200 firm that established these figures.
Dow became a major player in the M&a field, since they acquired between 1983 and 2007 95 business, took stakes in 58 firms and divested 166 businesses.
In 2006, Dow’s CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy, which consisted of two pillars. One was pursuing an asset light approach to its commodity business. In order to do so, he signed a JV agreement with a subsidiary of the Kuwait Petroleum Company, named Petroleum Industries Company. Dow and PIC signed a Memorandum of Understanding, which generated Dow a $7.2 billion after tax revenues.
Second, Mr. Liveris wanted to build a high-growth and high-value added performance business. In order to achieve this objective, Dow agreed to purchase Rohm and Haas. This acquisition had the purpose for Dow to become a producer of high-value chemicals and advanced materials.
Why does Dow want to buy Rohm and Haas?
As mentioned in the introduction, CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy. This included becoming a high growth and high-value added producer of specialty chemicals, with less cyclicality. Rohm and Haas fitted the picture perfectly, since they were an advanced material and specialty chemicals company, operating in 27 countries. Besides the interesting company profile description, there were several other reasons why Dow was interested in the Rohm and Haas company.
Most important reason was that the