Dow Chemical may seek lower price for Rohm & Haas

NEW YORK -- The shares of both U.S. companies plunged about 15% in afternoon trading.

Dow agreed to pay a 74% premium for the specialty chemical maker during the height of the energy crises in July, when the company was burdened by unprecedented costs for energy and carbon-based feedstocks.

Kuwait's government on Sunday scrapped its planned $17.4 billion K-Dow joint venture, calling the deal "very risky" amid a global financial crisis and because crude prices have tumbled more than 70% since the agreement was announced.

Dow had expected to get as much $9 billion in pretax proceeds from the deal.

Dow officials would not comment and it remained unclear Monday if the world's second-largest chemical company intended to scuttle the agreement.

Rohm & Haas said it "continues to work diligently" to complete the acquisition, which it said was not affected by the K-Dow venture.

Some analysts believe it would be unrealistic to expect the same price, however.

"There appears to be no way for Dow to unilaterally walk away from and/or terminate the merger agreement with Rohm & Haas," Deutsche Bank analyst David Begleiter said in a note to investors.

It's more likely the deal will be renegotiated for under $70 a share, he said.

Dow agreed to pay $78 a share, a huge premium over Rohm & Haas' $44.83 closing price on July 9.

Dow said at the time that buying Rohm & Haas would allow it to cut costs and provide a cushion from the volatile chemicals market.

The economy has since deteriorated rapidly.

Dow Chemical has said it will cut 5,000 jobs, 11% of its work force. It also closed 20 plants and idled 180 more.

Still, should Dow complete the buyout it would eliminate a longtime opponent in the competitive chemical sector.