It has probably occurred to the management at Dow Chemical (DOW) that it can not win a suit brought by Rohm and Haas (ROH) to force Dow to complete its buyout.

The early read on the merger agreement was that Dow could not get out and was probably facing billions of dollars in damages.

Now, it looks like the people who screwed up Dow’s chances of making an easy financial deal without having to go into the credit markets to buy ROH have come to Dow’s rescue.

According tothe FT, “The Kuwait Investment Authority would consider increasing its support for Dow Chemical’s disputed takeover of Rohm and Haas if the terms of the deal were changed to account for the downturn.” Kuwaiti Petroleum Corporation was going to set up a joint venture with Dow and that would have given the big chemical company $7.5 billion in cash. The KPC walked away, leaving Dow without the capital it needed to close the Rohm deal.

But, Rohm and Haas’s fight is probably not over. The part of the Kuwait potential financing which suggests that the deal be changed to account for the recession is not going to work. ROH has too much leverage. It will continue to force Dow by pushing it legal recourse and lambasting Dow in the press.

If Kuwait is earnest in helping Dow, it will put up a portion of the capital to complete the ROH transaction and force Dow into the credit markets to get the rest.

Douglas A. McIntyre

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