The good news is that Dow Chemical was finally able to renegotiate its Rohm & Haas purchase. The bad news is that Dow still has to pay $78 per share to finance the purchase but did get Rohm & Haas’ two biggest shareholders to invest 3 billion dollars in Dow.
Dow’s two biggest shareholders will receive 2.5 billion in preferred stock and invest another $500 million in the company. Investors were obviously not impressed as Dow’s stock was driven down to $5.87 in after hours trading. Dow still has to sell off assets, issue more debt and cut jobs just to complete the Rohm & Haas deal by April 1st. Analysts estimate that 20 cents per share of Dow’s earnings will be used to pay off interest payments on the newly issued preferred stock alone.
The only winner in the newly reached agreement are Rohm & Haas shareholders. Dow shareholders will still be feeling the pain for years to come.