FTC OKs Rohm & Haas purchase with conditions

Dow Chemical Co.'s deal to buy Rohm & Haas Co. moved significantly closer to conclusion yesterday as the Federal Trade Commission gave its blessing to the $15.2 billion acquisition.

Dow has 240 days to sell several business lines to satisfy the FTC's antitrust concerns, the government agency said in announcing its approval. Dow agreed to the FTC consent order.

One business line to be divested is for paint additives used on roadway striping. The operations targeted for sale are in Texas, Louisiana, California, West Virginia and North Carolina.

A merger agreement negotiated in July between Dow and Rohm & Haas, based on Independence Mall in Philadelphia, requires the deal to be completed within two business days after FTC approval - or by midnight Tuesday, a Rohm & Haas spokeswoman confirmed yesterday.

Dow, the nation's largest chemical company, has not said how it will finance the deal in the long term. In December, Kuwait scrapped a deal to buy a 50 percent stake in Dow's plastic-making business, depriving Dow of $7 billion it had planned to use in acquiring Rohm & Haas.

The Midland, Mich., chemical company has bank loans that seem to allow it to close the Rohm & Haas deal. But those loans would have to be refinanced in a year, which debt-rating analysts find troubling because of the nationwide credit crisis and the deepening recession. This week, Rohm & Haas announced an additional 900 employee cuts on top of 925 announced last year.

Rohm & Haas and Dow issued a statement after yesterday's FTC announcement saying they were "discussing the closing of the transaction."

Dow could be seeking more time to arrange its financing, or it could be trying to restructure the terms of its loans, analysts said. Experts believe Rohm & Haas has a strong merger agreement and Dow will be forced to complete the deal or face legal action.

Dow shares fell 5 cents, to $14.33, on the New York Stock Exchange. They are down 58 percent since the day before the acquisition was announced.

Rohm & Haas shares rose $5.36, to $65.82. Dow has agreed to pay $78 a share in cash.

Under the settlement with the FTC, Dow must sell its acrylic monomer and polymer research-and-development assets to a buyer approved by the agency.

The FTC said the businesses to be sold make chemicals used in manufacturing personal-care products, paints, architectural coatings, adhesives, coated paper and highway traffic lines.

"The FTC consent order . . . will ensure that consumers continue to benefit from competition in the markets for these important products and will not face the prospect of higher prices as a result of the acquisition," David P. Wales, director of the FTC's Bureau of Competition, said in a statement.