NEW YORK, Jan 23 (Reuters) - Dow Chemical Co received U.S. antitrust clearance on Friday for its more than $15 billion purchase of rival Rohm & Haas Co in exchange for an agreement to sell some assets.
It was the last remaining clearance the companies needed for the closely watched deal, according to Rohm & Haas spokeswoman Emily Riley. Under the merger terms, the companies have two business days to complete the transaction unless both agree to push back the closing.
Shares of Rohm & Haas rose 9 percent on the news but were still well below the deal value, prompting speculation that Dow might try to renegotiate the deal.
The takeover has been clouded by uncertainty since Kuwait last month scrapped plans for a $17.4 billion joint venture with Dow. Proceeds from the joint venture were to be used by Dow to help fund its purchase of Rohm & Haas.
The companies confirmed the FTC clearance and said they were discussing 'closing the transaction contemplated by their pending merger agreement.' Their joint statement did not elaborate.
The U.S. Federal Trade Commission said Dow would sell a range of businesses to an approved acquirer to preserve competition, including its acrylic monomer, hollow sphere particle, and acrylic latex polymer businesses.
'Dow and Rohm & Haas are direct and significant competitors in certain markets for acrylics and other industrial chemicals used to make coated paper products, paints, and adhesives,' David Wales, acting director of the FTC's Bureau of Competition, said in a statement.
Without the divestitures, the deal would have reduced competition in North America for the research, development, manufacture and sale of these products, the agency said.
European approval of the deal was announced earlier this month.
DOUBTS ABOUT THE DEAL
Last summer Dow agreed to buy Rohm and Haas for $78 a share -- a 74 percent premium -- to broaden its product offerings in higher-margin markets such as paints, coatings and electronic materials.
But after the Kuwaiti joint venture's collapse, some analysts and investors have speculated about whether Dow can coax Rohm back to the table to renegotiate the deal price.
Still, lawyers have characterized the merger agreement as being very tight and said Dow would be able to wiggle out of it only if the deal did not receive antitrust approval.
'The offer was originally for $78 (per share), and many people believe it will be renegotiated to a lower price,' said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.
'Some people are speculating that the deal will be completed near $70 per share,' Lefkowitz said. 'This has led to the buying of Rohm & Haas shares and its call options, as investors position for an announcement from Dow Chemical on what price the deal will be done at.'
Rohm & Haas' stock closed up $5.36 at $65.82 on the New York Stock Exchange on Friday. Dow shares were down 5 cents at $14.33.
(Reporting by Tim Dobbyn in Washington, Doris Frankel in Chicago and Michael Erman and Steve James in New York; Editing by Phil Berlowitz, John Wallace and Matthew Lewis)
((timothy.dobbyn@thomsonreuters.com; +1 202 898 8362; Reuters Messaging: timothy.dobbyn.reuters.com@reuters.net)) Keywords: ROHM DOW/FTC (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
It was the last remaining clearance the companies needed for the closely watched deal, according to Rohm & Haas spokeswoman Emily Riley. Under the merger terms, the companies have two business days to complete the transaction unless both agree to push back the closing.
Shares of Rohm & Haas rose 9 percent on the news but were still well below the deal value, prompting speculation that Dow might try to renegotiate the deal.
The takeover has been clouded by uncertainty since Kuwait last month scrapped plans for a $17.4 billion joint venture with Dow. Proceeds from the joint venture were to be used by Dow to help fund its purchase of Rohm & Haas.
The companies confirmed the FTC clearance and said they were discussing 'closing the transaction contemplated by their pending merger agreement.' Their joint statement did not elaborate.
The U.S. Federal Trade Commission said Dow would sell a range of businesses to an approved acquirer to preserve competition, including its acrylic monomer, hollow sphere particle, and acrylic latex polymer businesses.
'Dow and Rohm & Haas are direct and significant competitors in certain markets for acrylics and other industrial chemicals used to make coated paper products, paints, and adhesives,' David Wales, acting director of the FTC's Bureau of Competition, said in a statement.
Without the divestitures, the deal would have reduced competition in North America for the research, development, manufacture and sale of these products, the agency said.
European approval of the deal was announced earlier this month.
DOUBTS ABOUT THE DEAL
Last summer Dow agreed to buy Rohm and Haas for $78 a share -- a 74 percent premium -- to broaden its product offerings in higher-margin markets such as paints, coatings and electronic materials.
But after the Kuwaiti joint venture's collapse, some analysts and investors have speculated about whether Dow can coax Rohm back to the table to renegotiate the deal price.
Still, lawyers have characterized the merger agreement as being very tight and said Dow would be able to wiggle out of it only if the deal did not receive antitrust approval.
'The offer was originally for $78 (per share), and many people believe it will be renegotiated to a lower price,' said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.
'Some people are speculating that the deal will be completed near $70 per share,' Lefkowitz said. 'This has led to the buying of Rohm & Haas shares and its call options, as investors position for an announcement from Dow Chemical on what price the deal will be done at.'
Rohm & Haas' stock closed up $5.36 at $65.82 on the New York Stock Exchange on Friday. Dow shares were down 5 cents at $14.33.
(Reporting by Tim Dobbyn in Washington, Doris Frankel in Chicago and Michael Erman and Steve James in New York; Editing by Phil Berlowitz, John Wallace and Matthew Lewis)
((timothy.dobbyn@thomsonreuters.com; +1 202 898 8362; Reuters Messaging: timothy.dobbyn.reuters.com@reuters.net)) Keywords: ROHM DOW/FTC (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.