Dow Chemical Buys Rohm and Haas
Dow Chemical completed its more than $15bn acquisition of Rohm and Haas on Wednesday, and immediately sold off Morton Salt as part of a plan to scale back debt stemming from the merger.
Rohm and Haas is the key element in Dow's new advanced materials division, which will be headed by Pierre Brondeau as president and chief executive, Dow said.
The division, which includes coatings, building and construction, specialty materials, adhesives and functional polymers, and electronic materials, is intended to achieve $3bn in additional value growth opportunities, as well as annual cost synergies of $1.3bn.
Right away, Dow sold the Rohm and Haas salt business, Morton Salt, to Germany's K+S AG in a deal that it expects to close in mid-2009.
The sale is part of a plan by Dow to lower its debt, which has become an issue for some investors and analysts with the acquistion of Rohm and Haas.
"We are pleased that we reached an agreement with K+S at an attractive value in such a short period of time," Dow chief executive Andrew Liveris said in a statement. "This sale puts us ahead of schedule on our deleveraging plan post the close of the Rohm and Haas acquisition.
Earlier Wednesday, Standard & Poor's lowered its corporate credit and senior unsecured debt ratings on Dow Chemical to the lowest investment grade, BBB-minus, from BBB and left the company under review for further downgrade.
"We believe the [Rohm and Haas] transaction is an important strategic initiative for Dow ... but it will meaningfully stretch the financial profile to a level beyond what we consider consistent with the former ratings," said S&P's credit analyst Kyle Loughlin.
Dow is likely to sell other businesses, either to deleverage or appease anti-trust regulators. Indeed, the company said it has moved to comply with a Federal Trade Commission order to divest several assets and has been actively seeking buyers for the affected businesses.
The company said the FTC required it to divest its Clear Lake, Texas, acrylic acid and esters plant and the related businesses in North, Central, and South America.
It is also selling the UCAR Emulsion Systems specialty latex businesses in North America and the North American hollow plastic pigment business.
Dow also said it has decided to exercise its option to have the Haas Family Trusts make an additional $500m investment in Dow equity. This is consistent with Dow's plan to retire the bridge loan for the financing of the Rohm and Haas transaction by the end of 2009.
This will be accomplished through the sale of assets, issuance of equity and debt, and the reduction in the company's dividend to preserve cash.
On 9 March, Dow Chemical agreed to go through with its purchase of Rohm and Haas, reaching a settlement after the two sides were scheduled to go to a trial over Dow's refusal to close the deal.
The companies said Rohm and Haas shareholders would receive just less than $79 a share – $78 a share, plus a ticking fee agreed upon in the original deal.
Rohm and Haas stock, which was to cease trading on the New York Stock Exchange Wednesday, finished up 10¢ at $78.94. Dow Chemical stock closed 4.5% higher at $8.81.
By Steve James and Paul Thomasch, Reuters.
quoted from: Chemicals Technology
Rohm and Haas is the key element in Dow's new advanced materials division, which will be headed by Pierre Brondeau as president and chief executive, Dow said.
The division, which includes coatings, building and construction, specialty materials, adhesives and functional polymers, and electronic materials, is intended to achieve $3bn in additional value growth opportunities, as well as annual cost synergies of $1.3bn.
Right away, Dow sold the Rohm and Haas salt business, Morton Salt, to Germany's K+S AG in a deal that it expects to close in mid-2009.
The sale is part of a plan by Dow to lower its debt, which has become an issue for some investors and analysts with the acquistion of Rohm and Haas.
"We are pleased that we reached an agreement with K+S at an attractive value in such a short period of time," Dow chief executive Andrew Liveris said in a statement. "This sale puts us ahead of schedule on our deleveraging plan post the close of the Rohm and Haas acquisition.
Earlier Wednesday, Standard & Poor's lowered its corporate credit and senior unsecured debt ratings on Dow Chemical to the lowest investment grade, BBB-minus, from BBB and left the company under review for further downgrade.
"We believe the [Rohm and Haas] transaction is an important strategic initiative for Dow ... but it will meaningfully stretch the financial profile to a level beyond what we consider consistent with the former ratings," said S&P's credit analyst Kyle Loughlin.
Dow is likely to sell other businesses, either to deleverage or appease anti-trust regulators. Indeed, the company said it has moved to comply with a Federal Trade Commission order to divest several assets and has been actively seeking buyers for the affected businesses.
The company said the FTC required it to divest its Clear Lake, Texas, acrylic acid and esters plant and the related businesses in North, Central, and South America.
It is also selling the UCAR Emulsion Systems specialty latex businesses in North America and the North American hollow plastic pigment business.
Dow also said it has decided to exercise its option to have the Haas Family Trusts make an additional $500m investment in Dow equity. This is consistent with Dow's plan to retire the bridge loan for the financing of the Rohm and Haas transaction by the end of 2009.
This will be accomplished through the sale of assets, issuance of equity and debt, and the reduction in the company's dividend to preserve cash.
On 9 March, Dow Chemical agreed to go through with its purchase of Rohm and Haas, reaching a settlement after the two sides were scheduled to go to a trial over Dow's refusal to close the deal.
The companies said Rohm and Haas shareholders would receive just less than $79 a share – $78 a share, plus a ticking fee agreed upon in the original deal.
Rohm and Haas stock, which was to cease trading on the New York Stock Exchange Wednesday, finished up 10¢ at $78.94. Dow Chemical stock closed 4.5% higher at $8.81.
By Steve James and Paul Thomasch, Reuters.
quoted from: Chemicals Technology
