Dow to buy Rohm & Hass

Dow chemical co, the biggest US chemical maker, agreed to buy Rohm & Hass Co for about $18.8 billion to increase sales of more lucrative electronics materials and adhesives.  The purchase is the largest in Dow�s history.  Dow will pay $78 in cash for each Rohm & Hass share, 74% more than 9th July �08 closing price.  Financing includes equity investments of $3 billion by Warren Buffett�s Berkshire Hathway Inc and $1 Billion by the Kuwait Investment Authority, Midland, Michigan-based Dow Chemical said in a statement.

Dow, which raised prices for June and July more than 20% faces a �margin squeeze� as rising oil prices cut profits from sales of polyethylene and Sytrofoam, Chief executive officer Andrew Liveris said in an interview.  Rohm & Hass generated 31% of its 2007 profit from materials used to make electronics such as computer chips.  �This deal uses up much of Dow�s firepower,� Martin Evans, an analysts at Cazenove in London, said in a report.  �The premium is high as is often the case when chemical assets are acquired and is a necessary part of their transformation away from commodity exposures.�

The purchase is the biggest in Dow�s 101-year history, exceeding the $12 billion Dow paid to acquire Union Carbide Corp in 1999.

Rohm & Hass is the World�s largest producer of acrylic paint ingredients and also makes chemicals used in adhesives, packaging materials and personal care products.  Dow said the unit that will include Rohm & Hass�s business will have annual revenue of about $13 billion.  Dow had $53.5 billion in sales last year.

The purchase will have pretax cost synergies of at least $800 million per year from increased purchasing power for raw materials, supply chain improvements and the elimination of redundant corporate services and governance, Dow said.

�We only ever had two or three companies in our vista that made sense for us,� Liveris said and further added that �And our patience and our discipline, the wait for the right moment and the right time for the right property, when it becomes available you make the deal happen.�

Dow Chemicals� acquisition of the Indian born billionaire Raaj L Gupta headed speciality chemical company Rohm & Hass for over $18 billion, is likely to impact its proposed joint venture with Reliance Industry (RIL) and expansion plans in India worth over $100 million.

RIL sources said they would wait of hear from both Rohm & Hass and Dow chemicals on the future of the joint venture project.  �We have a good working relationship with Dow Chemicals and hope the development would not affect the proposed joint venture,� said RIL source.

�I am yet to get more details on the acquisition and so it is early to comment on our business development plans in India,� said Harish Badami, president and managing director of Rohm & Hass (India).

The US-based Rom and Haas had entered into an agreement with RIL in March last year to set up an acrylic-monomer complex in Jamnager at an investment of over $250 million.

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