WILMINGTON, Del. (CN) – Rohm & Haas sued Dow Chemical to force it to go through with its $15 billion acquisition of Rohm & Haas. Rohm claims Dow has the financing needed to close the deal, which was to close on Jan. 23, but is stalling because a Dow business deal collapsed in Kuwait. Rohm says that’s no excuse.
Rohm & Haas demands that Dow buy it for $78 per share, as promised. It claims the companies reached the merger agreement, for $75 a share, on July 10, 2008, plus additional compensation if Dow didn’t close the deal by Jan. 10, 2009.
The additional compensation consists of “ticking fees” of $1.3 million a day for 6 months, for each day Dow puts off the deal, according to the complaint in Chancery Court.
Rohm & Haas claims Dow secured $17 billion in financing for the acquisition by Sept. 8, 2008 – $2 billion more than it needed. It claims Dow refuses to close the deal because a Dow joint venture with a Kuwaiti company – to be known as K-Dow Petrochemical – collapsed in December.
“The failure of the K-Dow venture does not provide Dow with a basis for refusing to close,” the complaint states. “Dow’s obligations under the Merger Agreement are not in any way conditioned on consummation of the K-Dow joint venture. In fact, Dow’s obligation to complete the merger is not conditioned on financing of any kind. To the contrary, Dow covenanted that it ‘shall take all action necessary to ensure that as of the closing Date, (Dow) will obtain the financing. Merger Agreement § 5.1(b)(i). Dow’s refusal to close, therefore, is without any legal justification. And Dow does have in place committed financing that is $2 billion in excess of the total purchase price for Rohm and Haas.”
Rohm & Haas describes itself as a specialty materials company. It reported $8.9 billion in sales in 2007. Dow reported $53.5 billion of sales in 2007 and employs about 45,900 people, according to the complaint.
Rohm and Haas demands specific performance. It also sued Ramses Acquisition Corp., wholly owned by Dow, which was former “solely for the purpose of facilitating the acquisition of Roham and Haas.
Rohm and Haas is represented by Collins Seitz Jr. with Connolly Bove Lodge & Hutz.