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American chemical giant could get bigger

DOW Chemical Co, the biggest United States chemical maker, is on the verge of winning approval from US anti-trust regulators to purchase Rohm & Haas Co, said a person familiar with the matter.

The Federal Trade Commission's staff lawyers have recommended in favor of the deal after Dow agreed to divest its acrylic and emulsion businesses, a second person said. Both people spoke on condition of anonymity.

Dow is seeking to acquire Rohm & Haas to gain production of chemicals used in paints and electronics and decrease its reliance on sales of basic chemicals and plastics.

Dow must complete the transaction without US$9 billion that was to come from the formation of a plastics joint venture with Kuwait, which canceled it last month.

Dow Chief Executive Officer Andrew Liveris has said that he can buy Rohm & Haas using US$13 billion in short-term loans and US$4 billion of equity investments. Dow has said that it will seek court damages from Kuwait. Those damages would exceed the US$2.5 billion break-up fee that Kuwait is obliged to pay for pulling out of the venture, Liveris said in a January 6 interview.

Dow's credit rating was downgraded by both Standard & Poor's and Moody's Investors Service after Kuwait withdrew from the venture.

Dow fell 44 cents, or 2.97 percent, to US$14.38 in composite New York Stock Exchange trading yesterday. Rohm & Haas rose US$2.27 to US$60.46.

European regulators approved the transaction on January 8 after the European Commission in Brussels determined the combination wouldn't harm competition. The European authorities required no divestitures.


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