Chemicals company Rohm and Haas is trying to force Dow Chemical to finish its billion dollar acquisition of the firm.
Andrew Liveris, Dow’s chief executive, announced at the end of last week that the takeover would not be completed by the end of today (Tuesday 27th January). In a statement Rohm and Haas says it will “pursue all available alternatives” to make sure the $15.3 billion deal goes through.
It has already asked a Delaware court to force Dow to finish the buy up, which Dow says is proving difficult due to the current financial situation (court document). In its statement last week Dow said “recent events have made closing untenable at this time”.
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Dow was required to close the deal within two business days of the final regulatory approval, which occurred Friday. Prior to the approval, Dow could have simply paid a $750.0 million break-up to get out of the deal, but that is no longer an option.
Now Dow faces the wrath of the spurned …
– Forbes
Dow Chemical cited a decision by the Kuwait government to cancel a planned joint venture last month as reason for the delay. That deal would have netted the firm $9 billion.
“The failure of the K-Dow venture does not provide Dow with a basis for refusing to close,” lawyers for Rohm & Haas alleged in the lawsuit. “Dow’s obligation to complete the merger is not conditioned on financing of any kind.”
Interestingly, however, when Dow agreed to the deal, the state of the economy was already looking fairly bleak. In the first paragraph of the factual allegations, Rohm & Haas writes that, by July 2008 — the month the deal was signed — “the credit markets were already in turmoil and the risk that the U.S. and world economies could be entering a deep and prolonged recession was widely acknowledged.
Dow nonetheless agreed to pay a very substantial premium for Rohm and Haas because it recognized that the acquisition of Rohm and Haas presented a once in a lifetime opportunity to transform Dow into the world’s premier specialty chemical company. In the words of Dow’s Chairman and CEO, Andrew Liveris, Rohm and Haas ‘is a jewel. . . . There aren’t many jewels out there, this is one of them.’ ”