Dow Chemical 2011 Annual Report Download - page 183

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NOTE D – ACQUISITIONS
Acquisition of Rohm and Haas
On April 1, 2009, the Company completed the acquisition of Rohm and Haas. Pursuant to the July 10, 2008 Agreement and
Plan of Merger (the “Merger Agreement”), Ramses Acquisition Corp., a direct wholly owned subsidiary of the Company,
merged with and into Rohm and Haas (the “Merger”), with Rohm and Haas continuing as the surviving corporation and
becoming a direct wholly owned subsidiary of the Company.
The Company pursued the acquisition of Rohm and Haas to make the Company a leading specialty chemicals and
advanced materials company, combining the two organizations’ best-in-class technologies, broad geographic reach and strong
industry channels to create a business portfolio with significant growth opportunities.
Pursuant to the terms and conditions of the Merger Agreement, each outstanding share of Rohm and Haas common stock
was converted into the right to receive cash of $78 per share, plus additional cash consideration of $0.97 per share. The
additional cash consideration represented 8 percent per annum on the $78 per share consideration from January 10, 2009 to the
closing of the Merger, less dividends declared by Rohm and Haas with a dividend record date between January 10, 2009 and
the closing of the Merger. All options to purchase shares of common stock of Rohm and Haas granted under the Rohm and
Haas stock option plans and all other Rohm and Haas equity-based compensation awards, whether vested or unvested as of
April 1, 2009, became fully vested and converted into the right to receive cash of $78.97 per share, less any applicable exercise
price. Total cash consideration paid to Rohm and Haas shareholders was $15,681 million. As part of the purchase price,
$552 million in cash was paid to the Rohm and Haas Company Employee Stock Ownership Plan (“Rohm and Haas ESOP”) on
April 1, 2009 for 7.0 million shares of Rohm and Haas common stock held by the Rohm and Haas ESOP.
As a condition of the FTC’s approval of the Merger, the Company was required to divest a portion of its acrylic monomer
and specialty latex businesses and its hollow sphere particle business. The Company completed the sale of these businesses in
2010 (see Note E). Total net sales and cost of sales for these businesses amounted to approximately one percent of the
Company’s 2008 net sales and cost of sales.
The following table provides net sales and results of operations from the Rohm and Haas acquired businesses included in
the Company’s 2009 results since the April 1, 2009 acquisition. Included in the results from Rohm and Haas was $257 million
of restructuring charges (see Note C), a one-time increase in cost of sales of $209 million related to the fair value step-up of
inventories acquired from Rohm and Haas and sold in the second quarter of 2009, and a pretax loss of $56 million on the early
extinguishment of debt.
Rohm and Haas Results of Operations
In millions
Net sales
Loss from Continuing Operations Before Income Taxes
April 1 –
Dec 31,
2009
$ 5,599
$ (134)
The following table provides pro forma net sales and results of operations for the year ended December 31, 2009, as if
Rohm and Haas had been acquired on January 1, 2009. The unaudited pro forma results reflect certain adjustments related to
the acquisition, such as increased depreciation and amortization expense on assets acquired from Rohm and Haas resulting
from the fair valuation of assets acquired and the impact of acquisition financing in place at December 31, 2009. The pro forma
results do not include any anticipated cost synergies or other effects of the planned integration of Rohm and Haas. Accordingly,
such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been
completed on the dates indicated, nor are they indicative of the future operating results of the combined company.
Pro Forma Results of Operations
In millions, except per share amounts
Net sales
Net loss available for The Dow Chemical Company
common stockholders
Loss per common share – diluted
2009
$ 45,853
$(501)
$ (0.45)