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With litigation, it seems that the winners are usually the attorneys. Perhaps this is one of the key reasons that Dow Chemical (NYSE: DOW) and Rohm and Haas Co (NYSE: ROH) agreed to come back to the table and find a way to strike a merger. If not, both parties were on a destructive path to an unpredictable trial.
Interestingly enough, the new terms of the deal reinstate the $78 purchase price, but, of course, there are some wrinkles. The Haas Family Trust and Paulson & Co. will get as much as $3 billion preferred stock in Dow. This will be a much-needed infusion of capital.
From a strategic perspective, the deal makes a lot of sense. Basically, Dow will bolster its platform in premium chemicals, which is certainly attractive in the recessionary environment.
But with a price tag of $15 billion, the deal is not cheap, so Dow will need to work hard to wring out some efficiencies.
Oh, and by the way, there were some other beneficiaries in the deal – the investment banks. No doubt, they will enjoy the juicy fees.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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