Rohm & Haas sues Dow for breach of

Rohm & Haas is suing Dow Chemical in a Delaware court for failing to complete the agreed $15.4 billion takeover within the agreed time frame. After receiving the green light from the U.S. Federal Trade Commission (FTC) on January 23, 2009, Dow was obliged to close the deal by January 27. The trial will begin on March 9 and is scheduled to conclude in the same week. For every day beyond the original closing date, Dow faces a “ticking fee” of $3.3 million a day.
Dow recently informed Rohm and Haas that it would not close on the proposed acquisition. According to a press release from Dow, the company determined that recent material developments have created unacceptable uncertainties on the funding and economics of the combined enterprise. This asessment is based on several macro-economic factors such as the continued crisis in global financial and credit markets combined with the failure of Petrochemicals Industries Company of Kuwait (PIC) to fulfill its obligation to complete the formation of the K-Dow joint venture in late December 2008, which would have netted the firm $9 billion to use towards the purchase of Rohm & Haas.
“Our long term strategy remains unchanged and the proposed acquisition of Rohm and Haas is consistent with this strategy,” said Andrew N. Liveris, chairman and CEO. “Since Dow learned in late December of PIC’s failure to close the K-Dow transaction, Dow has been aggressively engaged on multiple paths seeking ways to enable the Rohm and Haas transaction. Dow remains interested in discussion to find a solution to complete the acquisition of Rohm and Haas, but recent events have made closing untenable at this time.”
In response to Dow’s actions regarding the merger, Rohm and Haas has filed suit against Dow and issued a statement which reads in part:
Rohm and Haas believes that Dow has the resources and flexibility to live up to its obligations under the merger agreement. Rather than focus on the necessary steps, Dow has embarked on an aggressive campaign in an attempt to frighten our employees, communities and customers with its statements. Rohm and Haas believes that the combination of the two companies will create a strong global competitor to benefit the shareholders and all other stakeholders in the longer term. These are sentiments often expressed by Dow since last summer. While there are short-term challenges in today’s economy, the combined company is well positioned to meet those needs.