Dow to buy Rohm & Haas for $18.8 bn

Dow Chemical Co, the biggest US chemical maker, agreed to buy Rohm & Haas Co for about $18.8 billion, reducing its dependence on less profitable products and increasing sales of paint ingredients and adhesives.

Rohm & Haas investors will receive $78 in cash for each share they hold, Midland, Michigan-based Dow Chemical said today in a statement.

 

The price is 74 per cent 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 said in an interview with Bloomberg Television that Dow faces a "margin squeeze" as rising oil prices cut profits from sales of polyethylene and Sytrofoam. The acquisition of Rohm & Haas, the biggest in Dow's 101-year history, will start to boost profits "meaningfully" two years after it's completed, the company said.

"This deal uses up much of Dow's firepower," Martin Evans, an analyst at Cazenove in London, said in a report. "The premium is high