Dow Rohm and Haas

DOW chemical company The year 2009 was the most active an challenging year for Dow in its whole history. It was the turning point for the transformation to the” leading global specialty chemical and advanced materials Company”. On April 1 2009 DOW finally completed the acquisition of specialty chemicals maker Rohm and Haas after eight months “fight”. On July 10 2008 DOW pronounced to pay $78 per share to buy Rohm and Haas (current stock price on 9 July, $44, 83) because they expected more than $7 billion in pretax process from the joint venture, K-DOW, with a state owned Kuwait company.

Due to the global financial crisis, the decrease of the oil prices and the governmental rating for the deal as “too risky” the Kuwait Company withdraw their $17. 4 billion offer in December 2008. Dow was now unwilling to pay the $15. 3 billion for Rohm and Haas and consequently tried to delay the process. With this situation, the dilemma of DOW was perfect, a global economic meltdown and a promise which DOW was not able to finish because of a deal break. The whole economy changed after the pronouncement in July that the second largest chemical company would like to by Rohm and Haas.

Stock prices of chemical companies increased immense and the shareholder of Rohm and Haas expect a large profit from their shares especially in the ongoing global downturn, pressing the stock values to the bare bone. Rohm and Haas forced DOW to finish the promised acquisition but DOW never got a specific plan how to handle this complex and significantly changed situation. Just an email from the chairman of DOW explained that it would be better to wait till June 2009 in order to finish the deal.

After they heard that Dow invested in different other projects it was simply too much for Rohm and Haas, as they could not understand why other deals were made but the acquisition was still delayed, so they started a litigation to enforce the merger. Rohm and Haas and DOW conducted several meeting to find a way to resolve the situation, but without any success and to the great disappointment of Rohm and Haas as their expectations were not met at all. Analysts said: “It was a “CLASH OF TITANS””. Finance Projects Clinical Research Case- DOW Chemical Company

Silke Rahden In terms of the second half of 2008 and beginning of 2009 we notice a dramatically decrease of the DOW stock price. Well, it is in the middle of the financial crisis in the USA but the more important “deal” which caused the decline was the acquisition of Rohm and Haas, pronounced in July 2008 and finally finished in April 2009. During this time the stock prices slide into free fall/ drop to the pits from $32,52 (July 2008) to $8,81 (April 2009). The absolutely low point was on 30 March 2009 with $8. 30 per share.

The main reason for the “death” point, in addition to the financial crisis, was the finish of the acquisition of Rohm and Haas after eight months up and downs. Income Statement: Finance Projects Clinical Research Case- DOW Chemical Company Silke Rahden References: http://finance. yahoo. com/q/is? s=DOW+Income+Statement&annual http://phx. corporate-ir. net/phoenix. zhtml? c=80099&p=irolstockcalculator&t=Calc&control_type=256&control_ http://crisisexperts. blogspot. com/2009/02/dowrohm-and-haas-acquisition-crisis. html Finance Projects Clinical Research Case- DOW Chemical Company Silke Rahden