Dow Chemical (DOW) continues to dodge the issue of why it will not close the transaction to buy Rohm and Haas. (ROH). Most analysts think that when a joint venture with Kuwait fell though Dow lost about $7 billion in payments that would have been part of the Middle East transaction. Dow would have used that money for the ROH deal.
Dow has made the claim that because the chemicals industry has fallen apart, finishing the acquisition of Rohm faces huge financial hurdles. Dow also claims that it does not have access to the credit necessary to close.
Rohm and Haas has begun the process of settling the dispute with Dow in the court system, and it would seem to have an unusually solid case.
In a letter from the Rohm and Haas board sent to Dow yesterday after a series of meetings between the two companies, it said “At none of those meetings, despite our repeated requests, did Dow’s representatives provide ours with meaningful details of what Dow is doing to secure financing for the merger.”
Dow has not come public with a specific description of exactly why it cannot obtain the money. It won’t make that disclosure because it has access to the capital. It does not want to admit that the price of that cash is more than it wants to pay, not more than it is able to pay.
Douglas A. McIntyre
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