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
Financing for the acquisition includes an equity investment by Berkshire
Hathaway and the Kuwait Investment Authority in the form of convertible
preferred securities for
"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
"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 stated, "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 segments. 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
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
"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.
Investor and Analyst Presentation & Webcast
Dow and Rohm and Haas will host a webcast and teleconference for the
investment community today,
About Dow
With annual sales of
About Rohm and Haas
Leading the way since 1909, Rohm and Haas is a global pioneer in the
creation and development of innovative technologies and solutions for the
specialty materials industry. The company's technologies are found in a wide
range of industries including: Building and Construction, Electronics and
Electronic Devices, Household Goods and Personal Care, Packaging and Paper,
Transportation, Pharmaceutical and Medical, Water, Food and Food Related, and
Industrial Process. Innovative Rohm and Haas technologies and solutions help
to improve life every day, around the world. Based in
Note: The statements contained in this document involve risks and uncertainties that may affect the Company's operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Company's expectations will be realized. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.
SOURCE The Dow Chemical Company