Dow’s Bid for Rohm and Haas Essay
1.Why does Dow want to buy Rohm and Haas? Dow, a producer of low-valued cyclical commodity chemicals, had future aspirations of being not only the largest but as well the highest valued chemical company in the United States. Its strategy was simple: to be an asset-light company with extremely high growth potential fuelled through advanced technology, geographical reach, strong industry channels and an overall switch in to the advanced specialty chemical and materials market. As a result when the option to purchase
Rohm and Haas was put to market Dow jumped immediately on the opportunity. Rohm and Haas brought with it mass amounts of experience in the specialty chemical business, strong …show more content…
2.What are the major deal risks inherent in this merger transaction? How and to whom does the merger agreement allocate these key risks? Hint: analyze the various provisions in case Exhibit 4.
What risk does each provision address and which party ultimately bears the risk?
Risks of delay and termination
Contractual Terms included: Closing Date §1.2, Ticking Fee §2.1a, Reasonable Best Efforts §5.6,
“Hell or High Water” Provision §5.6b, Termination Fees §7.2a, Enforcement and Jurisdiction §8.5.
The risks are made explicit and clear by listing the closing date, ticking fee, termination fees and the responsibility to enforce the terms and provisions. Both parties are required to take all actions to