Collapsed US takeovers
Lessons of the Dow/Rohm saga
June 01, 2009
Unlike the Hexion or United Rentals cases, Dow tried to pull out of its acquisition by challenging specific performance as inequitable
When the credit crisis struck, many buyers that had signed but not yet closed leveraged deals found themselves with a lemon: either the target could no longer support the leverage that was originally contemplated or, in many cases, the financing was no longer available. Some reacted to these unforeseen developments by renegotiating their deals, while others tried to walk away.
These efforts have spawned litigation that has focused the courts' attention on the drafting and enforceability of covenants and remedies under purchase agreements. Dow Chemical Company's (Dow) strategic acquisition of Rohm and Haas (Rohm) was no exception, and even though this battle was ultimately settled out of court and the merger was completed, the issues raised leading up to the trial may influence the drafting of future acquisition agreements.
The deal
On July 10 2008, Dow and Rohm signed a merger agreement for Dow to acquire Rohm for $78 in cash...
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