The Dow Chemical
Of course, had Dow's proposed deal with Kuwait Petroleum not fallen apart, the takeover of Rohm & Haas would likely have occurred smoothly and quickly. The $9 billion in funds received from the Kuwaiti joint venture would have gone nearly two-thirds of the way to paying for Rohm & Haas.
With that possibility now foregone, it became incumbent on Dow to look elsewhere for the shekels it needed to complete the acquisition. There was talk of involving not only private equity types, but public companies like DuPont
In an act of bravado -- or perhaps foolishness -- Dow shouldered the cost by itself. It borrowed $10 billion from its bank line and $3 billion from Warren Buffett's Berkshire Hathaway
All in all, however, in my not so humble opinion, this stacks too much leverage on the Dow balance sheet. Indeed, Dow's shareholders knees could begin to buckle, as Bank of America
But events also could turn out far differently than any of us might have expected. Surprise, surprise: It seems that Dow and the Kuwaitis are again holding talks with an eye toward resurrecting their original deal. And if that combination doesn't work, there appear to be other folks walking up to the party. As CEO Andrew Liveris stated during a conference call earlier in the week, Dow "[is] currently in face-to-face negotiations with potential buyers."
My advice for my Foolish friends is to watch these seemingly unending events closely. While this isn't the time to put your pesos into Dow Chemical, a reemergence of the Kuwaiti joint venture could change that picture very quickly.
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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He welcomes your questions and comments. Berkshire Hathaway is a Motley Fool Inside Value recommendation and a Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.