Case Study: Dows Bid for Rohm and Haas

4. In July 2008, Dow offered $78 in cash for each share of ROH. Using your estimates of standalone share price of ROH and the value of cost synergies from the merger, along with the growth synergies mentioned in the case, compute the net gains to Dow shareholders and ROH shareholders, respectively, under this deal. How sensitive are these estimates to the growth synergies being predicted by Dow?

5. Re-estimate the standalone share price of ROH as per the revised cash flow forecasts in Feb 2009. Suppose we also assume a 20% reduction in total synergy estimates. What are the net gains to Dow shareholders if they proceed with the deal?

6. What are the implications for Dow from the following provisions in the merger agreement: (a) ticking fee; (b) MAE clause; and (c) closing conditions? Why do you think Dow agreed to these provisions?