The Dow Chemical Company (DOW)

samsuh (< 20) Submitted: 3/10/2009 11:15:21 AM : Start Price: $6.12 DOW Score: +293.31

Though they got themselves into a bit of a mess with ROH, it should help out their bottom line in a few years once dow has digested this acquisition. look past the effective 78$ price tag to the negotiation terms. a judge did not force them to do this deal, they settled on agreeable terms for it.

though ROH will put a lot of stress on their balance sheet in the short term to maybe a year, they'll be fine within a few years.

i dont care much for the current management, but as that story goes... Thomas Watson Jr. was president of IBM from 1952 to 1971. There is a story about an IBM employee in the early 1960s that was running a division of IBM that lost 10 million dollars! Watson called him in to headquarters. The man walked into Watson’s office weak-kneed and Watson said, “Do you know why I called you here?” He said, “I assume you called me here to fire me.” Watson said, “Fire you? Hell, I just spent 10 million dollars educating you. I just wanted to be sure you learned the right lessons.”

As part of today's agreement, Rohm and Haas's two largest shareholders have agreed to purchase $2.5 billion in face value of perpetual preferred equity issued by Dow. In addition, one of the shareholders, the Haas Family Trusts has agreed that at Dow's option, they will make an investment in an additional $500 million of Dow's equity. These equity investments substantially reduce the debt financing required to fund the acquisition, Dow has restructured the transaction to essentially pay the equivalent of $63 per share in cash, and $15 per share in face value of preferred equity securities. To fund the acquisition of Rohm and Haas, Dow will use the proceeds from the equity issuances to reduce the amount it would otherwise be required to draw down from the $12.5 billion bridge loan, which was renegotiated last week to provide a one-year extension on $8 billion of the total loan. The financing for the acquisition also includes equity investments of $3 billion by Berkshire Hathaway and $1 billion by the Kuwait Investment Authority (KIA) in the form of convertible preferred equity.