The Dow Chemical Co. (Midland, Mich.; www.dow.com) announced that it has completed its acquisition of Rohm and Haas, following a high-profile legal dispute over Dow’s January 23rd decision not to close the deal once the appropriate regulatory approvals were in place. The acquisition is a major step in Dow’s strategy of growing its performance products and specialty portfolio to deliver more consistent earnings growth. Combining the two organizations’ best-in-class technologies, broad geographic reach and strong market channels will create a $14.0-billion diversified business portfolio, which will be called Dow’s Advanced Materials division. The division is intended to achieve $3.0 billion in additional value growth opportunities, as well as annual cost synergies of $1.3 billion.
Rohm and Haas is the key element in Dow’s new Advanced Materials division. Pierre Brondeau has been named president and CEO of this division, which includes: Coatings, Building and Construction, Specialty Materials, Adhesives and Functional Polymers, and Electronic Materials.
The creation of Dow’s new Advanced Materials division is expected to deliver significant cost and revenue synergies. Based on work that has been ongoing since July 2008, Dow has increased its annual cost synergy estimates to $1.3 billion, capitalizing on additional expected cost savings in the areas of combined purchasing and centralized business services.
Dow aims to leverage Rohm and Haas’s strengths and drive growth for the combined company. The Advanced Materials division will provide deeper geographic reach, increased channels to market, and complementary technologies. In addition, the combined company will have one of the largest research and development programs in the chemical industry.
Additionally, this aquisition will enable Dow’s transformation into an earnings growth company. By expanding its specialty chemicals and advanced materials businesses, Dow has shifted the balance of its portfolio to this higher growth, higher margin area. The Advanced Materials division is strongly positioned in more resilient markets, as well as businesses that are poised for growth in the economic upturn, including coatings, adhesives and electronics.