Thursday, July 10, 2008
The Big get BIGGER
Dow is buying Rohm and Haas for 15.3 billion in cash at a 74% premium on the stock. It's a nice deal for R & H, but I'm not sure that Dow is getting much from the merger. Sure, the margins will be better than in many of the commodity plastics that Dow is already trying to move away from, but I don't see much of the valuable "synergy" that is desired in mergers. It almost comes down to Dow thinking that they can manage the business better than the the current management can. I've never yet met a manager who thinks that someone does a better job than they do (which is strange in comparison to scientists and engineers who for the most part will accept and state that someone else is a better scientist/engineer than they are), so time will tell. Dow's stock took a bit of a hit after the news was announced, so Wall Street seems to have doubts as well.
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