Dow's bid for Rohm and Haas stalls

Mark Lapedus - January 26, 2009

SAN JOSE, Calif. -- Is Dow Chemical Co.'s proposed deal to buy Rohm and Haas Co. falling apart
amid the economic downturn?

In a blockbuster move, Dow Chemical (Midland, Mich.) in July said it would acquire chemical
supplier Rohm and Haas (Philadelphia) for $15.3 billion in cash. That deal is still pending despite
government approval.

On Monday (Jan. 26), Dow said it informed Rohm and Haas that it will not close the proposed
acquisition on or before Jan. 27. ''Dow has determined that recent material developments have
created unacceptable uncertainties on the funding and economics of the combined enterprise,''
according to the chemical giant.

Rohm and Haas' stock fell around 8 percent in early trading. Rohm and Haas stated that it intends to
pursue all available alternatives to protect its shareholders' interests. Citing the downturn, Rohm
and Haas last week disclosed a second set of actions to adjust its operations and cost structure,
including the elimination of 900 more jobs.

Dow blamed the problem on the economy and the failure of Petrochemicals Industries Co. of Kuwait
(PIC) to fulfill its obligation to complete the formation of the K-Dow joint venture in late December
2008.

Late last year, Dow Chemical was informed by its partners at the Kuwait Petroleum Corp. (KPC) and
PIC about a decision made by the Kuwait Supreme Petroleum Council (SPC), to reverse its prior
approval of the agreement between Dow and PIC to enter into K-Dow Petrochemicals, a planned 50-
50 joint venture company.

"Our long term strategy remains unchanged and the proposed acquisition of Rohm and Haas is
consistent with this strategy," said Andrew Liveris, chairman and CEO of Dow, in a statement.

''Since Dow learned in late December of PIC's failure to close the K-Dow transaction, Dow has been
aggressively engaged on multiple paths seeking ways to enable the Rohm and Haas transaction,''
according to the company. ''Dow remains interested in discussions to find a solution to complete the
acquisition of Rohm and Haas, but recent events have made closing untenable at this time.''