Dow acquires Rohm and Haas

Dow and Rohm and Haas announced a definitive agreement, under which Dow will acquire all outstanding shares of Rohm and Haas common stock for $78 per share in cash. The acquisition of Rohm and Haas will make Dow the world's leading specialty chemicals and advanced materials company, combining the two organizations' best-in-class technologies, broad geographic reach and strong industry channels to create an outstanding business portfolio with significant growth opportunities...

• $18.8 billion transaction marks pivotal point in Dow's transformation

MIDLAND, MI, July 10, 2008 -- Dow and Rohm and Haas announced a definitive agreement, under which Dow will acquire all outstanding shares of Rohm and Haas common stock for $78 per share in cash. The acquisition of Rohm and Haas will make Dow the world's leading specialty chemicals and advanced materials company, combining the two organizations' best-in-class technologies, broad geographic reach and strong industry channels to create an outstanding business portfolio with significant growth opportunities.

The transaction marks a decisive move in Dow's transformation into an earnings growth company with reduced cyclicality. Last December, Dow announced a joint venture with Petrochemical Industries Company of the State of Kuwait (PIC). With the collective impact of these two deals, performance products and advanced materials will represent 69 percent of Dow's total sales, on a 2007 pro forma basis, compared with 51 percent.

Financing for the acquisition includes an equity investment by Berkshire Hathaway and the Kuwait Investment Authority in the form of convertible preferred securities for $3 billion and $1 billion respectively. Debt financing has been committed by Citi, Merrill Lynch and Morgan Stanley who acted as financial advisors on the transaction.

Andrew N. Liveris, Dow chairman and CEO, commented: "The acquisition of Rohm and Haas is a defining step in our transformational strategy to shape the "Dow of Tomorrow" -- a high value, diversified chemicals and materials company, creating the largest specialty chemicals company in the United States with a leading global position in performance products and advanced materials.

"After an extensive analysis of acquisition opportunities in the marketplace, it became clear that Rohm and Haas is the ideal company to accelerate Dow's transformation. The addition of Rohm and Haas' portfolio is game-changing for Dow, enabling us to accelerate the growth of our Performance business portfolio and affording us a strong position in the global specialty chemicals and advanced materials sectors. Rohm and Haas brings us access to new and exciting technologies and offers an extended reach into emerging geographies, all of which are highly complementary to Dow's existing platforms and value growth priorities.

"Dow has a great deal of respect for Rohm and Haas and values the strong market-facing culture and solid reputation that have made it one of the most successful companies in the specialty sector and such a desirable entity. We are also thrilled with the investment by Berkshire Hathaway and The Kuwait Investment Authority, which we believe further underscores the merits of this transaction, our strategy and the great growth potential resulting from Dow's transformation."

Rohm and Haas chairman and CEO Raj L. Gupta states, "When this transaction is completed, Rohm and Haas will be a critical component of the New Dow, the world's preeminent chemical company and will be aligned with a forward-looking US-based enterprise, committed to investing in research for new technology solutions to many of the most pressing societal needs. We believe that by becoming a part of Dow, we secure a brighter future and greater growth prospects for our employees, consistent with the vision of our founders to remain a high-quality supplier of innovative technology and solutions."

The New Dow: An Earnings Growth Company
In addition to offering immediate and certain value to Rohm and Haas shareholders, the acquisition of Rohm and Haas by Dow will create significant value and enhanced growth potential for Dow shareholders.

Dow's acquisition of Rohm and Haas significantly strengthens and expands its specialty business and results in a decisive step towards establishing Dow as an earnings-growth company, markedly shifting the balance of its portfolio towards higher growth, higher margin specialties businesses. The transaction, coupled with the pending joint venture between Dow and PIC, will increase the pro forma 2007 EBITDA contribution from Dow's Performance businesses to 67 percent from 52 percent, delivering greater earnings consistency throughout the industry cycle.

Rohm and Haas provides Dow with an excellent position in a number of industry segments that are poised for significant growth given long-term market megatrends, most notably in the electronic materials and coatings markets. In addition to its leading platforms in these two important segments, Rohm and Haas has a strong presence in a number of other attractive areas such as water solutions, adhesives, personal care, biocides, and building and packaging materials. The acquisition will unlock value from Dow's existing portfolio by delivering a range of innovative new products and technologies to these high growth downstream sectors, while at the same time expanding the product offering for sale through Dow's own existing market channels.

Acquisition Will Deliver Significant Cost and Revenue Synergies
Dow expects the transaction to be meaningfully accretive to earnings in the second year following completion, with pre-tax annual cost synergies expected to be at least $800 million per year. Key areas of cost savings include increased purchasing power for raw materials; manufacturing and supply chain work process improvements; and the elimination of redundant corporate overhead for shared services and governance.

Dow also anticipates that the transaction will produce significant revenue synergies, through the application of each company's innovative technologies and as a consequence of the combined businesses' broader product portfolio in key industry segments with strong global growth rates. In coatings, for example, combining Dow's state of the art mechanical dispersions technology and high throughput research capability, with Rohm and Haas' industry leadership in acrylic latexes, provides the opportunity to further develop differentiated solutions for coatings customers. In the electronics industry, Dow's leadership in polymer science will enhance Rohm and Haas' development of display films and other electronic materials. And Dow's Low Energy Substrate Adhesives technology for non-automotive applications and its INFUSE Olefin Block Co-Polymers technology and products can enhance and broaden Rohm and Haas' product offering for differentiated adhesives.

Best-in-Class Integration to Leverage Rohm and Haas' Strengths
Dow will establish an advanced materials business unit at Rohm and Haas' current headquarters in Philadelphia and intends to contribute complementary Dow businesses to Rohm and Haas' existing portfolio, such as coatings, biocides and personal care. The total revenue of this new unit will approach $13 billion. Dow will retain Rohm and Haas' corporate name for this advanced materials business unit in order to capitalize on the company's well-established brand value.

Two Rohm and Haas directors will join the Dow Board of Directors, to allow for the continued stewardship of Rohm and Haas' corporate culture and assets, bringing the total size of Dow's board to 14.

"Rohm and Haas is a first class company with a strong product portfolio, proven research and development capabilities and a highly talented workforce. This acquisition affords us a tremendous opportunity to ensure the new Dow draws from the strengths of each of the two companies, capturing the best practices and the best people from each organization as we pursue our vision of becoming the largest, most profitable and most respected chemical company in the world," said Liveris.

The transaction, which has been unanimously approved by the Boards of Directors of both companies, remains subject to approval by Rohm and Haas shareholders, customary conditions and receipt of regulatory approvals. The companies are targeting completion of the transaction by early 2009.

Dow is a diversified chemical company that delivers a broad range of products and services to customers in around 160 countries, connecting chemistry and innovation with the principles of sustainability to help provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products.

Rohm and Haas is a global pioneer in the creation and development of innovative technologies and solutions for the specialty materials industry.

--

Also see:
-- Rohm and Haas reaches accord to be acquired by the Dow Chemical Company
-- Rohm and Haas wins two energy efficiency awards

###

More in Technologies