The Dow Chemical Company is one of the leading chemical company in the world. To adapt the new market environment and to bring the company to new heights, the Dow Chemical Company launched the “Dow of tomorrow” strategy in 2006. The strategy includes two parts – First part is pursuing an asset-light approach to its low-margin, but cash-rich, commodity businesses, this part was achieved by a joint venture with Petrochemical Industries Company; the second part is building high-growth and high-value-added performance businesses which plan to be achieved by purchases of Rohm and Haas.
In the acquisition of the Rohm and Haas. Both companies were facing some risk. In the Dow’s side, because of the debts financing, ticking fee payment for delay of …show more content…
The turning point happened at the early 2009. The bid of Rohm and Haas became hard to finish. The first reason is the financial crisis in the world. And the second reason is the unilateral termination of the PIC. This unexpected event made Dow catch in financial problem. Dow cannot afford the price of $78 per share to Rohm and Haas before the trade deadline.
There are three options for Dow’s CEO - Close the deal at $78 per share as defined initially;
Terminate the deal through litigation; Renegotiate specific terms. And two options for Rohm and Haas Litigate to close the deal at $78 per share and Renegotiate key deal terms with Dow.
According to the deal had not finished on time. The Rohm and Haas lawsuit Dow to the Delaware Court. To balance the legal credibility and the situation of these two companies, the most reasonable judge should be extending the negotiate period between these two companies.
Question 1. Why does Dow want to buy Rohm and Haas? Was the $78 per share bid …show more content…
Moreover, even though Dow was one of the giants in the chemical material industry, due to its downgraded credit rating, Dow still needed to raise investor’s confidence. Rohm & Haas’ presence in the global market will provide Dow with an expanded network into emerging markets and a strong operational and strategic fit (the synergy would reduce Dow’s cyclicality and create an outstanding business portfolio with diversified products and huge growth potentials). Forecasts predicted that growth synergies were expected to achieve $800 million of annual cost synergies and to generate $2.0 to $2.6 billion in additional present value. After this purchase, Dow would reinforce its global leader position in specialty chemicals company. Besides, the Haas family wanted to sell “substantially all” of their shares (32% of
In the acquisition of the Rohm and Haas. Both companies were facing some risk. In the Dow’s side, because of the debts financing, ticking fee payment for delay of …show more content…
The turning point happened at the early 2009. The bid of Rohm and Haas became hard to finish. The first reason is the financial crisis in the world. And the second reason is the unilateral termination of the PIC. This unexpected event made Dow catch in financial problem. Dow cannot afford the price of $78 per share to Rohm and Haas before the trade deadline.
There are three options for Dow’s CEO - Close the deal at $78 per share as defined initially;
Terminate the deal through litigation; Renegotiate specific terms. And two options for Rohm and Haas Litigate to close the deal at $78 per share and Renegotiate key deal terms with Dow.
According to the deal had not finished on time. The Rohm and Haas lawsuit Dow to the Delaware Court. To balance the legal credibility and the situation of these two companies, the most reasonable judge should be extending the negotiate period between these two companies.
Question 1. Why does Dow want to buy Rohm and Haas? Was the $78 per share bid …show more content…
Moreover, even though Dow was one of the giants in the chemical material industry, due to its downgraded credit rating, Dow still needed to raise investor’s confidence. Rohm & Haas’ presence in the global market will provide Dow with an expanded network into emerging markets and a strong operational and strategic fit (the synergy would reduce Dow’s cyclicality and create an outstanding business portfolio with diversified products and huge growth potentials). Forecasts predicted that growth synergies were expected to achieve $800 million of annual cost synergies and to generate $2.0 to $2.6 billion in additional present value. After this purchase, Dow would reinforce its global leader position in specialty chemicals company. Besides, the Haas family wanted to sell “substantially all” of their shares (32% of