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July 10, 2008 6:00 PM

Wachtell, Shearman & Sterling, Cravath, and Cleary Advising on Dow Chemical-Rohm and Haas Deal

Posted by Brian Baxter

With a little help from Warren Buffett and some Kuwaiti cash, Midland, Mich.-based Dow Chemical announced today that it would acquire Philadelphia-based plastics and adhesives manufacturer Rohm and Haas for $15.3 billion. The all-cash transaction is one of the year's biggest and comes in the wake of the  several reports issued last week on the drop in M&A in the first half of 2008.

"It's good to see a major strategic make such a deal when things are looking so gloomy," says Daniel Neff, a corporate partner at Wachtell, Lipton, Rosen & Katz. The firm advised Rohm and Haas on the deal. (Neff was named a Dealmaker of the Year by The American Lawyer in 2001 for his work closing five deals worth a combined $72.4 billion.)

Already the nation's largest chemical company, the acquisition of Rohm and Haas makes Dow one of the largest producers of specialty chemicals that enhance the functionality of products like hair gel, paints, and sunscreens.

The size of the deal is also unique given the tightening in the credit markets. Buffett's Berkshire Hathaway provided $3 billion in financing; an additional $1 billion came from the Kuwait Investment Authority, one of the world's largest sovereign wealth funds with over $200 billion in assets.

"Their involvement was certainly interesting," says Neff, a man of few words. "I guess whenever Warren Buffett is taking part, others think it must be a good idea."

In addition to Neff, Wachtell corporate partner Stephanie Seligman, antitrust partner Nelson Fitts, employee benefits partner Jeremy Goldstein, tax partner T. Eiko Stange, and associates Gordon Moodie, Franco Castelli, Angola Russell, and Michael Krasnovsky rounded out the Rohm and Haas deal team. (Neff says the firm has been doing work for the company for the past year.)

Dow Chemical turned to Shearman & Sterling M&A partners John Marzulli, Jr., and Scott Petepiece, capital markets partner Joel Klaperman, finance partner Ronald Bayer, employee benefits partner Doreen Lilienfield, tax partner Lawrence Bambino, finance counsel Christopher Poggi, IP counsel Daniel Glazer, environmental counsel Jason Pratt, and associates Daniel Litowitz, Andrew Noreuil, Elena Rubinov, Joseph Rabinowicz, Alexandros Aldous, Justin Mak, Tim Andison, Adam Kaminsky, Douglas Jones, Gloria Jung, and Gregory Milne. (Marzulli did not return a request for comment by the time of this post.)

Shearman previously represented Dow Chemical in its December 2007 agreement to form an $11 billion joint venture with Kuwait's Petrochemical Industries Company, a subsidiary of mammoth state-owned oil conglomerate Kuwait Petroleum. (After Saudi Arabia and Iraq, Kuwait has the world's third-largest oil reserves.)

Cleary Gottlieb Steen & Hamilton partners George Cary, Jeremy Calsyn, Dirk Schroeder, and Brian Byrne advised Dow Chemical on antitrust issues.

Cravath, Swaine & Moore served as counsel on the transaction to the Haas Family Trusts, which collectively control roughly 33 percent of Rohm and Haas's outstanding stock. Corporate partner Richard Hall, trusts and estates partner Daniel Mosley, litigation partner Elizabeth Grayer, associates Kenneth Halcom, Robin Landis, and Marvin Tagaban, and summer associate Jennifer Sasso rounded out the team from Cravath.

The deal comes at a time when both companies are struggling to cope with rising oil costs that cut into profits for plastics, adhesives, and commodity chemicals. As part of the deal, Rohm and Haas will remain in its Philadelphia headquarters and continue doing business under the current name.

Is the deal a sign that things are looking up for transactional work?

"My crystal ball is cloudy," Neff deadpans.

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