March 9, 2009 / 12:58 AM / in 9 years

UPDATE 3-Dow Chemical says Rohm talks going "quite well"

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GEORGETOWN, Del, March 8 (Reuters) - 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.

Dow outside spokesman Matthew Henson said the company would have more to disclose on Monday.

Unless a settlement is reached, Dow and Rohm and Haas are set to face off on Monday in a Delaware court over Dow’s refusal to close its takeover of Rohm and Haas.

Henson said it was looking for the “right deal,” but a takeover of Rohm and Haas at the agreed upon price of $78 per share in cash was not acceptable. If it does not gets the right deal, it said it would proceed with the court hearing.

Dow also said it was important that it protect its investment-grade rating. Dow has said a credit downgrade could trigger loan defaults and limit the company’s access to commercial paper.

Dow agreed to buy specialty chemicals company Rohm and Haas last July at a 74 percent premium in order to broaden its product offerings in higher-margin markets such as paints, coatings and electronic materials.

But Dow balked at closing the deal after a joint venture with Kuwait fell apart. Dow had intended to use proceeds from that $17.4 billion plastics joint venture to help fund the Rohm deal.

The company has claimed that completing the agreed-upon transaction amid rapidly worsening global economic conditions would jeopardize its future. Dow already has cut jobs, slashed its dividend and said it is looking at the possible sale of 12 different assets.

Rohm and Haas sued Dow in January to try to force the company to close the merger at the original agreed price.

Both companies said in a joint statement on Friday they were in talks to try to settle the litigation. Dow also said that it had managed to renegotiate the terms of its financing for the deal, giving it an option to extend its one-year bridge loan for another year.

A settlement could keep Dow out of court in a case where many lawyers have said it holds the weaker hand.

Rohm and Haas could not be immediately reached for comment. (Reporting by Michael Erman, Editing by Lincoln Feast) (For more M&A news and our DealZone blog, go to here)

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