Dows Bid for Rohm and Haas Mid Term Exam Kent Bowles EMBA 20
MERGERS AND ACQUISITIONS
EMBA 2015
Name Brandon Bowles bb779@georgetown.edu
Darrell Kent dwk29@georgetown.edu
Assignment Dow’s Bid for Rohm and Haas Mid-Term Exam
Date January 23, 2015
This assignment exclusively represents my own work. I have not discussed this case or this assignment with anyone and have done no outside research unless specifically authorized to do so.
Signed__________________________________________________________________
Table of Contents
1 Financial Math – Pre Crisis 1
Exhibit 1: Valuation Assumptions 1
1.1 Value of the Cost Synergies 1
Exhibit 2: Cost Synergy Valuation 2
1.2 Value of the Revenue/Growth Synergies 2
Exhibit 3: Revenue/Growth Synergy Valuation 2
1.3 Complete Synergy Value Analysis 2
Exhibit 4: Complete Synergy Valuation Analysis 3
1.4 What is the Most Dow Should Pay for Rohm? 3
Exhibit 5: Price Range for Purchase of Rohm 3
1.5 Synergy Plausibility and Obstacles to Realization 3
1.6 Change in Values w/ $1 Billion More in Revenues by Year 3 4
Exhibit 6: Synergy Value Change w/ $1Billion More Revenue in Year 3 4
Exhibit 7: Adjusted Price Range for Purchase of Rohm 4
1.7 The View from the Wall Street 4
1.8 Other Relevant Financial Facts 5
2 Deal Design 5
2.1 Key Issues Being Addressed and How 5
Exhibit 8: Deal Design 5
2.2 Overall Impression of the Merger Agreement 5
2.3 Deal Design Signals & Dow’s Desire to Merge Now 5
3 Analyzing Dow’s Strategy 6
4 Conclusion 6
4.1 Good Decision for Dow? 6
Exhibit 9: Pros and Cons of the Decision 7
4.2 What Should Liveris Do Now? 7
4.3 What Should Gupta Do Now? 7
1 Financial Math – Pre Crisis
The case presents an American company Dow, producer of commodity chemicals, who is in the final stages of acquiring another company Rohm & Haas. Rohm & Haas is a perfect match for Dow in respect of the strategic and financial perspective. Dow is also pursuing another key deal with Kuwait’s Petrochemical Industries Company (PIC)
EMBA 2015
Name Brandon Bowles bb779@georgetown.edu
Darrell Kent dwk29@georgetown.edu
Assignment Dow’s Bid for Rohm and Haas Mid-Term Exam
Date January 23, 2015
This assignment exclusively represents my own work. I have not discussed this case or this assignment with anyone and have done no outside research unless specifically authorized to do so.
Signed__________________________________________________________________
Table of Contents
1 Financial Math – Pre Crisis 1
Exhibit 1: Valuation Assumptions 1
1.1 Value of the Cost Synergies 1
Exhibit 2: Cost Synergy Valuation 2
1.2 Value of the Revenue/Growth Synergies 2
Exhibit 3: Revenue/Growth Synergy Valuation 2
1.3 Complete Synergy Value Analysis 2
Exhibit 4: Complete Synergy Valuation Analysis 3
1.4 What is the Most Dow Should Pay for Rohm? 3
Exhibit 5: Price Range for Purchase of Rohm 3
1.5 Synergy Plausibility and Obstacles to Realization 3
1.6 Change in Values w/ $1 Billion More in Revenues by Year 3 4
Exhibit 6: Synergy Value Change w/ $1Billion More Revenue in Year 3 4
Exhibit 7: Adjusted Price Range for Purchase of Rohm 4
1.7 The View from the Wall Street 4
1.8 Other Relevant Financial Facts 5
2 Deal Design 5
2.1 Key Issues Being Addressed and How 5
Exhibit 8: Deal Design 5
2.2 Overall Impression of the Merger Agreement 5
2.3 Deal Design Signals & Dow’s Desire to Merge Now 5
3 Analyzing Dow’s Strategy 6
4 Conclusion 6
4.1 Good Decision for Dow? 6
Exhibit 9: Pros and Cons of the Decision 7
4.2 What Should Liveris Do Now? 7
4.3 What Should Gupta Do Now? 7
1 Financial Math – Pre Crisis
The case presents an American company Dow, producer of commodity chemicals, who is in the final stages of acquiring another company Rohm & Haas. Rohm & Haas is a perfect match for Dow in respect of the strategic and financial perspective. Dow is also pursuing another key deal with Kuwait’s Petrochemical Industries Company (PIC)