Thursday, July 10, 2008

Dow Chemical (DOW) To Acquire Rohm and Haas (ROH) for $78/Share

Rohm and Haas Company (NYSE: ROH) entered into an agreement with The Dow Chemical Company (NYSE: DOW), under which Dow will acquire all of the outstanding shares of Rohm and Haas common stock for $78.00 per share in cash. Shares of ROH closed at $44.83 yesterday. The agreement provides that Rohm and Haas Company will retain its Philadelphia Headquarters location, and continue to do business under the Rohm and Haas name. Additionally, Dow will contribute a number of specialty chemicals business segments to the Rohm and Haas portfolio which have greater synergy with the Philadelphia Company’s established strengths. Source: StreetInsider

My dividend growth stocks are getting bought out by competitors as they present stable corporations with a nice moat. The first one that is in talks to be bought out is BUD. Now ROH is going to be bought out by a consortium of a Kuwait Sovereign Wealth Fund, Buffet and Dow Chemical. I was only able to accumulate a half position in ROH, but nevertheless now I have to re-allocate the funds accross the rest of my portfolio. You could check my analysis of ROH here.

At the time of this weriting ROH is up over 65% from yesterday's close. I would consider selling half of my position shortly in order to lock in a gain. The market price is about 5% lower than the offer price at $78. The companies have said they hope to complete the deal by early 2009. I would keep my other half of the position to tender it by that time.

2 comments:

  1. I was in the same boat,

    I initiated a position on July 1 after watching it skid for a while and was almost giddy when I caught it at what I figured to be its sales per share.
    There are a number of industrials at super cheap valuations right now and its beginning to show in some of this M&A action.

    ReplyDelete
  2. Nurse B 911,

    Thanks for stopping by. A lot of the Dividend Aristocrats are pretty cheap these days. Even if we are in recession, most of the stocks which I have focused on in this blog have "moat" and thus would perform pretty consistently over the next years.

    ReplyDelete

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