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April 3, 2009 1:27 PM

Shearman, Freshfields Advising on Dow Chemical Divestiture

Posted by Brian Baxter

Thursday was a busy day for Dow Chemical's lawyers. First, the nation's largest chemical company finally closed on its $16.5 billion buyout of Rohm and Haas. The same day, Dow agreed to sell Rohm unit Morton International to a German agrichemicals company for $1.7 billion to help finance its acquisition of Rohm.

Shearman & Sterling advised Dow on its initial $15.3 billion offer for Rohm last summer. The firm reprised its role advising the company on Thursday's transactions.

M&A practice group cohead George Casey, executive compensation partner Doreen Lilienfeld, tax partner Douglas McFadyen, M&A counsel Daniel Litowitz, environmental counsel Jason Pratt, and associate Rory O'Halloran comprised the Shearman team advising Dow. (Baker & McKenzie and Mayer Brown also advised Dow on the sale.)

Dow, based in Midland, Michigan, needed the money from the sale of Morton Salt (the largest consumer salt maker in the U.S.) to replace some of the $7.5 billion in financing that was lost when a planned $17.4 billion joint venture with Kuwait's Petrochemical Industries Company fell apart in late December.

That withdrawal caused a delay in the close of the Rohm acquisition. Rohm responded by suing Dow in Delaware's Chancery Court, hoping to force a sale. Rohm and Dow later agreed to settle the Delaware action and proceed with the merger in early March.

Warren Buffett's Berkshire Hathaway is providing $3 billion in financing for the Dow/Rohm tie-up. Kuwait's sovereign wealth fund, the Kuwait Investment Authority (KIA), is providing an additional $1 billion in preferred stock financing.

Gibson, Dunn & Crutcher capital markets and M&A partner Steven Guynn and tax partner Jeffrey Trinklein are representing the KIA.

New York-based Freshfields Bruckhaus Deringer M&A partners Matthew Herman and Julian Pritchard and associates Gregor Von Bonin, Raquel McKenney, and Christian Matarese are advising Kassel, Germany-based K+S AG, which is acquiring Morton Salt. (Freshfields was one of three firms, along with Wachtell and Canada's Fasken Martineau DuMoulin, that advised Rohm on Dow's acquisition.)

K+S makes food-grade and road salts, fertilizers, plant care products; it supplies about 12 percent of the world's supply of potash. With the Morton's acquisition, K+S becomes the world's largest salt producer.

The transaction also allows Dow to significantly reduce its debt load.

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