Dow Chemical and Rohm & Haas Reach A Deal!

If you’ve been following the story with Dow Chemical and Rohm & Haas today, you may have whiplash.The two companies had agreed to merge in a $15.3 billion deal cut at the height of the boom. Now Dow has been attempting to renegotiate the deal, hoping to lower the purchase price. But the merger contract is said to be “iron clad,” and Rohm has been pushing back hard.

Here’s quick run down of the latest.

  • A month or so ago, the Delaware judge overseeing the case made some mysterious comments that had investors in both companies scratching their heads and may have prompted Dow and Rohm to settle.  “Trial courts have to reach conclusions based on what they hear and the way they feel about the parties and their positions. Frequently, parties are surprised,” the judge said. That sounded to scary to risk a trial.
  • The lawyers for the companies were supposed to meet in court this morning.
  • Intitially, the trail was delayed for the a few hours while the two companies could reach a deal.
  • Around 1 PM, news began to work its way around that the companies had not reached a deal and the trial would start tomorrow.
  • Just a few moments ago, David Faber on CNBC reported that they had reached a deal that gives most shareholders in Rohm the $78 of cash per share they had been promised. Some larger shareholders, including Paulson & Co and the Haass family trust, will take preferred stock in Dow. (For those of you in the slow section today, that’s a concession by the big shareholders of Rohm to get the deal done. Everyone would prefer cash these days.) He said the deal will close on April 1.


So, is this it? Has a deal been reached to avoid the uncertainty of a trial? It seems like it is.

The big fear here was that Delaware would invent some kind of new “credit crunch” rule that would allow Dow to unwind the deal. That would throw other M&A deals into a chaotic zone of uncertainty, and potentially make mergers harder to get done as parties would doubt the courts would enforce their agreements.

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