DETROIT (AP) Dow Chemical Co. has agreed to buy rival Rohm and Haas Co. for more than $15 billion in cash in a deal that Dow hopes will fuel its growth in a more lucrative wing of the chemical-making business.
"The addition of Rohm and Haas' portfolio is game-changing for Dow," Chairman and Chief Executive Andrew Liveris said Thursday in a statement announcing the deal.
The $78-per-share deal includes money from a Kuwaiti sovereign wealth fund and Warren Buffett's Berkshire Hathaway. The price represents a 74 percent premium to Philadelphia-based Rohm and Haas' closing share price of $44.83 on Wednesday. The Haas family, descendants of one of the company's founders, holds about 65 million shares, a 33 percent stake worth nearly $5.1 billion based on the purchase price.
Chief Financial Officer Geoffery Merszei said the quality and reputation of Rohm and Haas' businesses, brands, products and technologies as well as its work force make the premium worth paying.
"While it's hard to put a price on a company's culture and people, this premium recognizes the fact that Rohm and Haas is a highly-coveted asset," Merszei said Thursday morning in a conference call with industry analysts and investors.
Based on the per-share purchase price and the roughly 196 million shares Rohm and Haas had outstanding as of April 22, the deal is worth about $15.29 billion.
The companies said assumed debt will boost the total value of the transaction to about $18.8 billion.
The acquisition is part of an effort by Dow to move into the higher-margin specialty chemicals market, which may provide a buffer against ups and downs in basic chemical sales. Specialty chemicals are produced for more specific uses, compared with those produced as high-volume commodities for manufacturing.
Dow said the deal will make it the world's leading specialty chemicals and advanced materials company.