Dow Chemical 2011 Annual Report Download - page 185

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produce significant growth synergies through the application of each company’s innovative technologies and through the
combined businesses’ broader product portfolio in key industry segments with strong global growth rates.
Financing for the Rohm and Haas Acquisition
Financing for the acquisition of Rohm and Haas included debt and equity financing (see Notes P, V and W).
Rohm and Haas Acquisition and Integration Related Expenses
During the first quarter of 2011, pretax charges totaling $31 million were recorded for integration costs related to the April 1,
2009 acquisition of Rohm and Haas, which was completed in the first quarter of 2011. During 2010, pretax charges totaling
$143 million were recorded for integration expenses. During 2009, pretax charges totaling $166 million were recorded for legal
expenses and other transaction and integration costs related to the acquisition. These charges, which were expensed in
accordance with the accounting guidance for business combinations, are shown as “Acquisition and integration related
expenses” and reflected in Corporate. An additional $60 million of acquisition-related retention expenses were incurred during
2009 and recorded in “Cost of sales,” “Research and development expenses,” and “Selling, general and administrative
expenses” and reflected in Corporate.
Purchased In-Process Research and Development
Purchased in-process research and development (“IPR&D”) represents the value assigned to acquired research and
development projects that, as of the date of the acquisition, had not established technological feasibility and had no alternative
future use. Prior to January 1, 2009, amounts assigned to IPR&D meeting these criteria were charged to expense as part of the
allocation of the purchase price of the business combination. With the adoption of ASC Topic 805, “Business Combinations,”
on January 1, 2009, IPR&D acquired in a business combination is capitalized and tested for impairment annually.
The Company recorded a pretax charge of $7 million in 2009 for IPR&D projects associated with the October 30, 2009
purchase of lithium ion battery technology that was not part of a business combination. The estimated value assigned to the
IPR&D projects was determined primarily based on a discounted cash flow model. The IPR&D charge is shown as “Purchased
in-process research and development charge” in the consolidated statements of income and was related to a technology
purchase for projects within the Ventures business, impacting Corporate.
NOTE E – DIVESTITURES
Divestiture of Contract Manufacturing Business
On December 31, 2011, the Company sold the shares of Chemoxy International Limited, a contract manufacturing company
located in the United Kingdom, to Crossco (1255) Limited. All assets and liabilities aligned with this company were sold
including receivables; inventory; property, plant and equipment; customer lists; trademarks; software; and trade and other
payables. The sale was completed for $6 million, net of working capital adjustments and costs to sell, with proceeds subject to
customary post-closing adjustments to be finalized in subsequent periods. The value of the net assets divested was $48 million.
The Company recorded a $42 million pretax loss on the sale, included in "Sundry income (expense) - net" and reflected in
Performance Materials. The Company recorded an after-tax gain on the sale of $44 million, primarily related to a tax benefit
triggered by the recognition of capital losses on the share sale.
Divestiture of Polypropylene Business
On July 27, 2011, the Company entered into a definitive agreement to sell its global Polypropylene business (a Performance
Plastics business) to Braskem SA. The definitive agreement specified the assets and liabilities related to the business to be
included in the sale: the Company's polypropylene manufacturing facilities at Schkopau and Wesseling, Germany, and Freeport
and Seadrift, Texas; railcars; inventory; receivables; business know-how; certain product and process technology; and customer
contracts and lists. On September 30, 2011, the sale was completed for $459 million, net of working capital adjustments and
costs to sell, with proceeds subject to customary post-closing adjustments to be finalized in subsequent periods. The proceeds
included a $474 million receivable that was paid to the Company on October 3, 2011. Dow's Polypropylene Licensing and
Catalyst business and related catalyst facilities were excluded from this sale. The transaction resulted in several long-term
supply, service and purchase agreements between Dow and Braskem SA, which are expected to generate significant ongoing
cash flows. As a result, the divestiture of this business was not reported as discontinued operations.
Divestiture of Styron Business Unit
On March 2, 2010, the Company announced the entry into a definitive agreement to sell the Styron business unit (“Styron”) to
an affiliate of Bain Capital Partners. The definitive agreement specified the assets and liabilities related to the businesses and
products to be included in the sale. On June 17, 2010, the sale was completed for $1,561 million, net of working capital
adjustments and costs to sell, with proceeds subject to customary post-closing adjustments. The proceeds included a