IHS Chemical Week


Dow-R&H: Stuck in the Middle With You?

1:46 PM MST | March 6, 2009 | By VINCENT VALK

In the course talking to people in the industry for our M&A cover story, some things fell through the cracks. This bit about the Dow-Rohm and Haas situation from Dan Watson, managing director at Blairgowrie Associates, is among them.

Let’s not say that the two companies will sacrifice themselves to get the deal done, but it does seem that, at the end of the day, Dow wants Rohm and Haas and Rohm and Haas wants Dow – at least according to one observer.

Dan Watson of Blairgowrie Associates told me, essentially, that not only would it be very difficult (and expensive) for Dow to extricate itself from the Rohm and Haas acquisition, but to do so may run against Dow’s strategic interests. Dow has made no secret of its desire to be a bigger player in specialty chemicals, and acquiring Rohm and Haas is the only way for America’s largest chemicals maker to successfully execute that strategy, according to Watson.

And what of BASF? “I think there’s a feeling within Rohm and Haas that they would’ve lost if they sold themselves to BASF,” Watson notes, adding that Dow would be more likely to leave R&H’s culture intact.

Obviously, however, the elephant in the room is the terms of the deal. While I’m not sure the existing $74/share offer wouldn’t have the effect of killing both companies (echoes of LyondellBasell, perhaps?), Watson’s point about the mutual interest in the combination is pretty compelling. That is, of course, provided that the terms change, a point that Watson readily concedes. “My gut feel is that they will be successful in renegotiating the purchase price somehow, but I don’t think it will come down to $60/share,” he says. Between $60/share and $74/share, “probably north of $65/share,” is more like it, he adds.

Could this sort of arrangement be what the two firms will settle upon in their recently announced discussions? I wouldn’t be surprised, but this is far from over. Stay tuned.

UPDATE: Apparently it is over, and apparently I'm kind of like CNBC. Dow's going to pay $63/share in cash, plus $15/share in face value of preferred equity securities. More here.

contact us | about us | customer care | privacy policy | sitemap | advertise

ihsCopyright © 2015 IHS, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

North Asia Russia Southeast Asia China India/Pakistan Middle East Eastern Europe Western Europe Central America Canada USA Australia/New Zealand South America Africa