If you're seeking a quality combination in a volatile market, I think there's a lot to like about Dow Chemical's
For starters, there's the -- oh, how I hate this word -- synergistic nature of the pairing. Dow will be able to add the higher-margin specialty chemicals business from Rohm and Haas to its own basic chemicals operations.
Then there's the comfort of knowing that the Oracle of Omaha backed the deal with his company's dough. Warren Buffett, through Berkshire Hathaway
The deal, which was announced Thursday, isn't cheap. Dow will pay $78 for each of Rohm and Haas' shares, a whopping 74% premium to Rohm's Wednesday closing price of $44.83. That said, it looks like the merger will result in big cost savings, perhaps as much as $800 million a year pre-tax. Rohm and Haas had nearly $9 billion in 2007 revenue, compared to Dow's $54 billion. Among the company's holdings is Morton Salt, so the deal is clearly worth its ... no, I won't go there.
Along with Buffett's backing, the Kuwaiti Investment Authority is chipping in another $1 billion, also in exchange for convertible preferred securities. And amid a credit crunch, it's also somewhat comforting to have a debt commitment from Citigroup
With both Dow and its rival chemicals giant DuPont
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