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Less than a month ago Dow Chemical (NYSE:DOW) was begging Rohm & Haas (ROH) to come to the bargaining table. Now, after a new agreement with their lenders and some chiding from the judge, they are essentially telling Rohm, "give us the deal we want or we'll see you in court".

Reuters Reports:

Dow Chemical Co (DOW.N) said on Sunday that settlement talks with Rohm and Haas Co (ROH.N) were going "quite well" on the eve of a scheduled court hearing on their soured $15 billion merger. Unless a settlement is reached, Dow and Rohm and Haas are set to face off on Monday in Delaware court over Dow's refusal to close its more than $15 billion takeover of Rohm and Haas.

A spokesman for Dow said it was looking for the "right deal," but a takeover of Rohm and Haas at $78 per share in cash was not acceptable. Unless Dow gets the right deal, it said it would proceed with the court hearing. Dow said it was important that it protected its investment-grade rating.

Dow said it would have more to disclose on Monday. Rohm and Haas could not be immediately reached for comment.

Notice the change? Dow has taken Rohm's arguments off the table and the judge has made it clear that he will weigh the interests of the near 60,000 employees the combined entity would have vs. the interest of the 3 shareholder groups who stand to benefit the most should the merger be forced immediately. One can't help but think it was a less than subtle way of saying "get to the table".

Recent actions have Dow making concessions and working with its bankers. Here is the rub for Rohm. The whole deal is contingent on Dow extending is loans with the bank an additional year. The banks agreed to do that only if Dow maintains its credit rating. Forcing the deal now would cause them to lose that and the whole deal would end up costing jobs...lots of them, a scenario the judge has already alluded to wanting to avoid.

It is the banks who are now forcing the hands of Rohm. Expect concessions on their part.

Disclosure: Long DOW