Dow Chemical To Buy Rohm and Haas for $18.8 Billion

2008-07-10 | 08:05

Biggest deal in Dow Chemical's history

Dow Chemical Co., the biggest U.S. chemical maker, agreed to buy Rohm & Haas Co. for about $18.8 billion, reducing its dependence on petroleum-based commodity chemicals and increasing sales of more profitable products.

Rohm & Haas investors will receive $78 in cash for each share they hold, Midland, MI-based Dow Chemical said today in a statement. The price is 74 percent higher than Rohm & Haas's closing price yesterday. Financing for the deal includes equity investments of $3 billion by Berkshire Hathaway Inc. and $1 billion by the Kuwait Investment Authority, the company said.

Chief Executive Officer Andrew Liveris has said he has been seeking a large acquisition that would reduce Dow's dependence on swings in the petroleum market and transform it into a more specialized, faster-growing company. 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.

The purchase is the biggest in the company's 101-year history, exceeding the $12 billion Dow paid to acquire Union Carbide Corp. in 1999.

`Made Sense'

``We only ever had two or three companies in our vista that made sense for us,'' Liveris said today in an interview with Bloomberg Television. ``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.''

Berkshire had about $35 billion in cash to invest as of March 31. Buffett spent $4.5 billion in March for a 60 percent stake in the Pritzker family's Marmon Holdings Inc. In April, he committed $6.5 billion to help finance Mars Inc.'s takeover of Wm. Wrigley Jr., the world's biggest maker of chewing gum.