Monday, January 26, 2009

What happened to the "ironclad" Rohm & Haas deal?

At least it wasn't "air tight" or "ironclad" here!

The collateral damage is Rohm & Hass. That deal is now over, no matter how "air tight" the merger agreement with Dow Chemical was.

It will be just another footnote on another failed deal, in a credit squeezed recessionary environment, that will crush another arbritrage fund.

Here was the next stage in this deal. Did those who bought the stock really know anything?

Now Barron's says you should still take a shot with the stock. Why?

If Liveris wanted to buy ROH, he would of done so already. If he wanted to renegotiate a lower price, he would of done so already. All he wants to do is walk away, and walk away at a price that won't cost Dow Chemical $750 million or being forced by gunpoint to acquire the company by the courts.

Dow said that, "Dow has determined that recent material developments have created unacceptable uncertainties on the funding and economics of the combined enterprise."

That is DOW's MAC, along with Kuwait backing out of their deal.

Look what Dow said about the deal in July:

---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.

---Dow expects the transaction to be meaningfully accretive to earnings ...

---Dow also anticipates that the transaction will produce significant revenue synergies...

And Liveris' personal statement on the deal:
---"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."

So now DOW will delay, and get the banks nervous with their commitment letters for the $13 billion bridge loan. Liveris sold the banks a bill of goods when Kuwait backed out of their deal with DOW. At that time, he said there was at least "six firm offers" that wanted to take Kuwait's place and that he had divestitures that total "$7.5 billion number, we would seek to get that number again. We would fill that hole not just with this property but with other properties we would divest.."

Liveris so far, has nothing, and nothing is what he will get.

The only good thing about this deal collapse, (and don't kid yourself, it is a collapse) is that we won't see Andrew Liveris and his mug on CNBC!

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