Dow Chemical to dive into specialty chemicals with acquisition of Rohm & Haas

11-Jul-08

Dow Chemical has decided to buy Rohm & Haas for a total value of US$15.3 bln at US$78 per share which will enable Dow to dive into specialty chemicals market, apart from the commodity chemicals market, thereby broadening the product offerings in the paints, coatings and electronic materials. The deal, set to close early next year, shall allow the acquired company to operate under its own name from Philadelphia HQ and integrate some Dow's specialty chemicals units. As per the senior authority of Dow Chemicals, this move will shy the company away from the commodity chemicals towards the higher margin and less volatile specialty chemicals and downstream markets. Dow will finance the deal using US$3 bln fund from Buffet's Berkshire Hathaway and another US$1 bln from Kuwaiti investment house, which will strengthen the tie between Dow Chemicals and Kuwait. The deal comes after Dow sold US$9.5 bln worth of its businesses to create a JV with the state owned Kuwaiti Petrochemical Industries Co. In addition, Dow and Saudi Aramco plan to jointly build a US$26 bln petrochemical complex in Saudi Arabia to cash in on the biggest oil reserves to meet rising demand for plastics used in consumer goods. This trend is clearly indicative of a fortifying relation between the US Petrochemical industry and the Middle East.