Hotchkis and Wiley Urges Closing of Dow Chemical Acquisition of Rohm and Haas on Contractual Terms
21 February 2009 - 12:30AM
Business Wire
Hotchkis and Wiley Capital Management today announced the firm
has contacted Rohm and Haas Company (NYSE:ROH) to express support
for the closing of the acquisition of Rohm and Haas by The Dow
Chemical Company (NYSE: DOW) under the contractual terms of a
definitive agreement entered by Dow and Rohm and Haas on July 10,
2008.
A large shareholder of Rohm and Haas, Hotchkis and Wiley
addressed CEO and chairman Rajiv Gupta in the following letter
today:
� Mr. Rajiv L Gupta CEO and Chairman of the Board Rohm and Haas
Company 100 Independence Mall West Philadelphia, PA 19106 �
Dear Mr. Gupta,
We are writing to express Hotchkis and Wiley's support for your
efforts to close the Dow Chemical transaction on its contractual
terms. As a recent top ten shareholder of Dow Chemical and current
large shareholder of Rohm and Haas, we are intimately familiar with
the assets of both companies. Additionally, we have undertaken a
thorough analysis of the merger agreement and Dow Chemical's
ability to finance this transaction.
Regarding the merger agreement, our conclusion is that specific
performance is warranted. We view the contract as strong and
unlikely to be improved. It is our view that Dow Chemical should
honor their commitment. However, in the event that the agreement
continues to be breached, we want to affirm your resolve to seek
specific performance along the original terms laid out in the
contract. Any change to the original contract would merely expose
shareholders of Rohm and Haas to unnecessary risks.
Dow has a variety of options available to honor the agreement on
its original terms. These options include drawing down the bridge
loan, divesting certain assets, obtaining long-term debt financing
and issuing equity. While the current financial crisis has made
financing terms less favorable than they have been in the past,
options are nevertheless available. Any one or combination of these
options would provide the capital needed to close the
transaction.
The most obvious solution for Dow Chemical is to undertake an
equity offering. This option has been available to Dow since the
signing of the agreement and continues to be available today. We
believe that the current uncertainty regarding the transaction has
obscured the value of the combined entity. We have expressed to Dow
Chemical our interest in participating in an equity offering to
accommodate the transaction.
Hotchkis and Wiley has a 28 year history of investing in US
equity markets. As of December 31, 2008, we managed $10.8 billion
in client assets. We look forward to being of any help possible.
Please contact me with any questions or follow up discussion.
� Sincerely, Stan Majcher Principal and Portfolio Manager �
About Hotchkis and Wiley Capital
Management
Established in 1980, Hotchkis and Wiley Capital Management
employs a disciplined, value-oriented investment process in
managing domestic equity assets for institutional and mutual fund
investors. Based in Los Angeles, the firm is independently owned
with a majority ownership interest held by its management and
professional team. More information on Hotchkis and Wiley is
available at www.hwcm.com.
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