...As a manager at the Dow Chemical Company overseeing the silicon breast implant litigation, I would opt to conduct a full-scale advertising campaign focused on describing “…the benefits of silicone products. Without mentioning the breast-implant issue,” and “tell numerous heart-wrenching tales about how silicone products have saved the lives of children. “ I think this would be the most strategic way to handle this situation given the circumstances. By design, this campaign would yield many benefits for Dow Chemical’s business. First of all, this campaign would distract the general public from the negative aspects of the silicone products business and focus them on the positive aspects. I am confident that appealing to people’s emotions is truly effective and would help Dow Chemicals restore their corporate image. By providing facts about some “heart-wrenching” situation about how silicone products save numerous lives of children we would blur the negative conception about silicone products, if not completely remove it. The general public responds well to messages that have a strong emotional flow. If the advertising campaign would not be able to remove the bad perception of silicone products from the general public, it would at least impose a sense of differentiation in regards to the silicone products. By default, people associate silicone with the silicone breast implants. This advertising campaign would aim to make people associate the silicone products with something...
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...Executive Summary In July 2008, Dow Chemical announced an acquisition of Rohm and Haas, a specialty chemicals producer, in an attempt to implement its new strategy of pursuing high growth businesses. The financial crisis that hit in the fall and the termination of PIC joint venture called into question Dow’s ability to finance the deal. Based on the valuation models, paying $78/share for Rohm and Haas remained a good value for Dow post financial crisis as the combined company retained its ability to generate synergies. Dow should proceed with the deal as announced to prevent costly litigations and aim for maximizing long-term shareholder value. To avoid being downgraded to junk status and incurring other concerns of financial distress, Dow should attempt to renegotiate the terms of its financing, particularly its $13 million bridge loan. Table of Contents I. The Firms…………………………………………………...…….p. 3 a. Dow Chemical b. Rohm & Haas c. Petroleum Industries Company II. The Acquisition……………………………………………..……p. 3-5 d. The Rationale e. The Valuation f. The Financing III. The Risks……………………………………………………….…p. 5 IV. The Financial Crisis……………………………………….……...p. 5-7 g. The Macroeconomy and Industry h. The Firms i. The Post-Crisis WACC j. The Post-Crisis Valuation k. The Post-Crisis Financing V. The Recommendations……………………………………………p. 7-8 l. The Options m. The Recommendations ...
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...Why does Dow want to buy Rohm and Haas? Was the $78 per share bid reasonable? Why was the deal structured as all cash? Dow Chemical (“Dow”) wants to acquire Rohm and Haas (“Rohm”) for its strong operational and strategic fit. When Liveris became Chairman and CEO of Dow, he shifted the focus to growth and profitability by becoming an asset light producer of commodity chemicals and becoming a high-valued-added producer of specialty chemicals and advanced materials. This combination is a step in that direction that would bring together best-in-class products and technologies, broad geographic reach, and strong industry channels for growth opportunities. Rohm would also expand Dow’s network into emerging markets and alter Dow’s earnings profile by increasing the growth rate and reducing the cyclicality of the chemicals portfolio. The growth synergies driven by expanded product portfolios, innovative technologies, increased geographic reach, and improved market channels were expected to generate $2 - $2.6 billion in additional value. Also, after a one-time restructuring cost of $1.3 billion, Dow expects to generate at least $800 million in annual cost synergies. On a Rohm stand-alone basis, the free cash flow analysis (Exhibit 1) shows that Rohm has an implied per share price of $46.48, which is roughly in line with Rohm’s stock price one day before deal announcement of $44.83. However, when factoring the $11.78 in growth synergies and $34.84 in cost synergies, it yields an implied...
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...Values, Ethics and Business Decisions International MBA - Antai College of Economics & Management, Shanghai Jiao Tong University, Oct 2011 Corporate Social Responsibility: The Bhopal Gas Tragedy Five Past Midnight in Bhopal What happened on the night of December 2nd-3rd 1984 in Bhopal? A Tragedy Water enters IC storage tank 610. The refrigeration unit, which should have kept the MIC close to 0°Celsius, is shut off. The water triggers off an exothermic runaway reaction and consequently the release of the lethal gas mixture, a poisonous cloud of MIC, hydrogen cyanide, monomethylamine, carbon monoxide and possibly 20 other chemicals. The cloud of gas envelops the city like an arc of over 20 square kms before the residents could run away. No stock of antidote is available. The composition of the poisonous cloud is not known. Up to 10,000 people may have died. The Causes What are the causes of this tragedy? Viewed from the Context Overconfidence in the production technology, leading to the choice of a dangerous process; Overcapacity of the plant, leading to excess storage of a dangerous product; Bad economic performance, leading to disinterest and disinvestment; Bad management, leading to dangerous cost reductions; Insufficient safety training and standards, leading to unskilled behaviour. Economy Industry Company Plant Team Human act Causal Chain With such a causal...
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...Dow’s Bid for Rohm and Haas 1.Why does Dow want to buy Rohm and Haas? Dow, a producer of low-valued cyclical commodity chemicals, had future aspirations of being not only the largest but as well the highest valued chemical company in the United States. Its strategy was simple: to be an asset-light company with extremely high growth potential fuelled through advanced technology, geographical reach, strong industry channels and an overall switch in to the advanced specialty chemical and materials market. As a result when the option to purchase Rohm and Haas was put to market Dow jumped immediately on the opportunity. Rohm and Haas brought with it mass amounts of experience in the specialty chemical business, strong management and a diverse portfolio of businesses that Dow was searching for. As well it provided an establish foundation within the specialty market in which Dow could further mould to fit within its general corporate structure. In a perfect world, Rohm and Haas was the perfect match for Dow’s two tiered growth strategy, and appeared to be in a vulnerable state with the sudden announcement of its sale. Was the $78 per share bid reasonable? In valuing Rohm and Haas at the time of the bid we believe the price of $78 per share was in fact reasonable. In our calculation of the standalone Rohm and Haas value we used the company’s projected FCF from Exhibit 7a with the provided WACC of 8.5% to complete the DCF. Although the provided calculation...
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...catastrophes.[1] It occurred on the night of December 2–3, 1984 at the Union Carbide India Limited (UCIL) pesticide plant in Bhopal, Madhya Pradesh, India. A leak of methyl isocyanate gas and other chemicals from the plant resulted in the exposure of hundreds of thousands of people. The toxic substance made its way in and around the shantytowns located near the plant.[2] Estimates vary on the death toll. The official immediate death toll was 2,259 and the government of Madhya Pradesh has confirmed a total of 3,787 deaths related to the gas release.[3] Others estimate 3,000 died within weeks and another 8,000 have since died from gas- related diseases.[4][5] A government affidavit in 2006 stated the leak caused 558,125 injuries including 38,478 temporary partial and approximately 3,900 severely and permanently disabling injuries.[6] UCIL was the Indian subsidiary of Union Carbide Corporation (UCC), with Indian Government controlled banks and the Indian public holding a 49.1 percent stake. In 1994, the Supreme Court of India allowed UCC to sell its 50.9 percent share. Union Carbide sold UCIL, the Bhopal plant operator, to Eveready Industries India Limited in 1994. The Bhopal plant was later sold to McLeod Russel (India) Ltd. Dow Chemical Company purchased UCC in 2001. Civil and criminal cases are pending in the United States District Court, Manhattan and the District Court of Bhopal, India, involving UCC, UCIL employees, and Warren Anderson, UCC CEO at the time of the disaster...
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...Fudan – MIT China Lab Projects 2015 – 2016 1. Dow Corning: The customized market study & opportunity digging of China’s infrastructure construction industry for Dow Corning, China Company Information 公司信息 Name of Company/ Business Unit 公司/事业部名称 Website 网址 Address 地址 Dow Corning (China) Holding Co., Ltd. 道康宁（中国）投资有限公司 www.dowcorning.com www.dowcorning.com.cn dowcorning.tmall.com No.1077 Zhangheng Road, Zhangjiang Hi-Tech Park， Pudong District, Shanghai 201203 , P.R.C. 中国上海市浦东区，张江高科技园区，张衡路1077号，邮编： 201203 Company Background 公司背景 Established in 1943 specifically to explore and develop the potential of silicones, Dow Corning is a global leader in silicon-based technology and innovation. We are passionate about silicon technology’s versatility, its possibilities and its unique potential to help solve some of the most important challenges facing our world. Brief Introduction 公司简介 Stage of Development Through our Dow Corning® and XIAMETER® brands, we provide performance-enhancing products and solutions to meet the needs of customers in virtually every major industry and to improve the daily lives of nearly a billion of the world’s people. More than half of our annual sales are outside the United States. Dow Corning Corporation is equally owned by The Dow Chemical Company and Corning, Incorporated. Dow Corning also is the majority shareholder in Hemlock Semiconductor Group, which is comprised of several joint venture companies. Hemlock Semiconductor is a leading provider of polycrystalline...
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...three sons were fortunate for a $700,000 accident settlement from the trucking company. After legal costs and other expenses, the remaining $417,000 was put in a special trust to care for Mrs. Shank. However, six years later the providers of Mrs. Shank’s health plan, Wal-Mart, sued the Shanks for the $470,000 it had spent on her medical care. Wal-Mart was fully entitled to the money; in the fine print of Mrs. Shank’s employment contract it said that money won in damages after an accident belonged to Wal-Mart. A federal judge had to rule in favor of Wal-Mart, and the family of Mrs. Shank had to rely on Medicaid and social-security payments for her round-the-clock care. Wal-Mart may be reversing the decision after public outcry. However this case pinpoints Wal-Mart’s often criticized treatment of employees as a commodity and its sometimes inhuman business ethics. 9 Trafigura Dumping Toxic waste on the Ivory Coast and gagging the media Earlier in the year, there was media frenzy in the U.K. over celebrities getting court injunctions to silence the press from reporting on their various misdeeds and grubby encounters. This story actually stems from a far more serious beginning, in 2006. Trafigura is a multinational formed in 1993, trading in base metals and energy, including oil. It makes almost 80 billion USD a year. In 2006, it caused a health crisis affecting 108,000...
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...the long-term economic, social, and psychological damages to the community and to the company’s employee were staggering. In some ways, the investigation of this hazard indicated that the design of this chemical plant did not follow the Engineering Design Process. The people of Bhopal were killed by a gas called MIC (methyl isocyanate). MIC is highly toxic and its vapor can cause many diseases, such as blindness, lung damage, physical traumas. That very night, more than 25 tons of an MIC vapor/liquid mixture were released to the atmosphere. Not only human, but also the animals perished in the disaster, poisoned by the huge gas leak. A large number of people are still suffering from the disaster after thirty years. Many of those who were exposed to the gas have given birth to physically and mentally disabled children. After the disaster, the Indian justice system spent twenty five years on criminal trial and reached a conclusion. The Union Carbide plant agreed to pay $470 million to the victims of the disaster and their families. Some activists and victims of the Bhopal disaster were not satisfied with the results. Although the Union Carbide factory in Bhopal has long since shuttered, the site has not been properly cleaned or dismantled (Union Carbide became a part of Dow Chemical Company in 2001). What are the causes of this disaster? A set of simultaneous failures caused the disaster. Human error in failing to insert the slip blinds was the first failure...
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...1 The CASE Journal Volume 4, Issue 2 (Spring 2008) Table of Contents Click on the article or case title to go to that page Editorial Policy Letter from the Editor Case Abstracts Cases “Sally’s Dilemma: Making Tough Choices in Collaborative Visioning” Karl A. Hickerson, David J. O’Connell & Arun K. Pillutla, St. Ambrose University “The Death of a Salesman Revisited: Part A” Herbert Sherman, Long Island University & Daniel James Rowley, University of Northern Colorado “The Death of a Salesman Revisited: Part B” Herbert Sherman, Long Island University & Daniel James Rowley, University of Northern Colorado “Customer Service at the Jewish Community Center” Edward Demarais, Salem State College, Sandra Sheckman, & Gina Vega, Salem State “The Frozen Production Line” Anton Massman, U.S. Air Force, Elaine Davis & Janell M. Kurtz, St. Cloud State University “Dow Chemical and Agent Orange in Vietnam” Cedric Dawkins, California State Polytechnic University – Pomona Membership Form Page 2 The CASE Journal Volume 4, Issue 2 (Spring 2008) EDITORIAL POLICY The audience for this journal includes both practitioners and academics and thus encourages submissions from a broad range of individuals. The CASE Journal invites submissions of cases designed for classroom use. Cases from all business disciplines will be considered. Cases must be factual, and releases must be available where necessary. All cases must be accompanied by an instructor’s manual ...
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...the period under discussion Union Carbide – at the time one of America’s largest companies – dealt with severe shocks to its business and financial stability. The case reviews the company’s efforts to deal with its choices and with the involvement of key financial intermediaries in providing roadmaps to these choices. It illuminates the broad spectrum of alternatives available in the capital markets and the tradeoffs in following difficult alternatives. In particular it highlights the shifting emphasis between debt and equity as the company struggled with its financial demands. The case provides realistic understanding of the viewpoint of corporate financial management in crisis situations and the interplay with investment banks in finding the best solutions in the capital markets to deal with fundamental financial issues. The case “The Union Carbide Deal” highlights three phases of the company’s financial situation. The first phase includes the Bhopal plan disaster and GAF takeover attempt. The second phase is the debt burden, and the final phase is the bank financing and equity. In discussing the first phase, the Bhopal accident is really the catalyst for all the financial issues Union Carbide experienced from 1984 when it occurred until long past the end of the case and its eventual merger with Dow Chemical. As described in a New York Times article by Claudae Deutsch, “the bitter aftertastes continue to tarnish their corporate reputations….Those issues have had lingering...
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...distributors to change the label on Kathon MWX, the lack of end customer awareness for the manufacturer brands has detrimentally limited sales due to precedent relabeling habits in the industry. Rohm & Haas can achieve and possibly surpass its sales targets in the short-term by increasing price and incentivizing distributors with higher margins, and in the longer term by strengthening sales channel relationships with industrial supply houses and machine tool shops, as well as mitigating risk of brand cannibalization of other products by relabeling Kathon MWX. Analysis Kathon MWX At the end of December 1983, Rohm and Haas introduced Kathon MWX, a biocide, which is specifically geared toward smaller, individual tanks. Research shows that in best case scenario, Kathon MWX can save an end user up to 54% of annual cost when used. (See exhibit 1). However, despite Kathon MWX’s high quality and relatively low price, Rohm & Haas has been struggling with its sales of the product and establishing market share. Kathon MWX has not even reached a tenth of its targeted revenue during the first half of the year. Currently, the maintenance biocide market for small reservoir end users is near equally dispersed among a few large players, but its $20 million...
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...____________________________________________ _______________________________________ Rohan Dhaigude: 5 Naveen Venkatesh: 5 ____________________________________________ _______________________________________ (1-5 scale; 5 = excellent) : 5 Assignment Being Discussed : Dow Chemicals Group work: Why is there a move towards splitting the upstream and downstream divisions? 1. The overvalued acquisition of Rohn & Haas increased Dow Chemical’s debts, which further led to a reduction in their margins. Due to this sticky financial situation, they were unable to capitalize on the boom in cheap shale gas. Further the overvalued acquisition had reduced their working capital and this also resulted in suspension of their dividends. 2. To increase transparency in the transfer pricing for the materials that are being supplied to the downstream. Currently the costs for the subsidiaries are not well accounted for. 3. No visible profits from the downstream. The downstream is currently overshadowing the gains made by upstream through the cheap shale gas. 4. Imbalanced R&D investment between the upstream and downstream sections. 5. Difficulty in analyzing the performance of the various subsidiaries (AgroSciences, Specialty Chemicals) 6. Reduced confidence from large investors What difference will it make and how will it benefit the company.( answer the question based on the article and don’t do extensive research on this) 1. Improved Transfer Pricing policies: Increase in...
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...Andy Andrews Kay Cosgrove English 1304 March 20, 2012 Lake Jackson My Community. When asked where I live, I usually respond “I am from Lake Jackson, Texas. Next they usually follow up with “where is that located?” Lake Jackson is a community comprised of several neighborhoods in Brazosport County, south of Houston. The city grew out of Dow Chemical's need for employee housing in the early 1940s. The company began constructing communities on the former Lake Jackson Plantation. After the town incorporated in 1944, Dow built its first streets, parks and sewer system. Lake Jackson is one of those close knit communities where generally everyone knows everybody. You go to the same preschool, you go to the same church, and everyone goes to the same mall. In a tiny town, there is not much to do, so it most often leads to boredom and talks of leaving. That in term is what I believe is the problem in my community. People live in Lake Jackson, mostly due to the chemical plants that are located nearby. Meaning in turn most kids parents work at the plants. Lake Jackson is seen as a place to raise your kids and as a place to retire. This leads to their kids to repeat the cycle. Instead of leaving to pursue your own dreams and live your own life, you are essentially just repeating the cycle of going to the same school as your parents, work at the plants, have children of your own and thus continuing this life cycle. The image enclosed is of the sign one sees upon entering Lake Jackson...
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...Dow Chemical’s Acquisition of Rohm & Haas (2008-2009) MGT 4066 Professor Jayaraman December 7, 2010 Joseph Dennis Kunal Parbadia Robert Pirkle Will Weston Yash Ghogre Overview In mid 2008, Dow Chemical found itself in an industry that had recently been experiencing some consolidation. As one of the giants in the chemical material industry, it needed to maintain its position as an industry leader or else it would probably lose its foothold near the top. Then there is the target, Rohm & Haas, a smaller chemical materials firm, yet still considered a rival of Dow Chemical. Both companies had been in operation for a combined 200 years and have been creating innovative materials that each and every one of us see or use in our everyday lives without even noticing. On July 10, 2008, Dow Chemical announced the acquisition of Rohm & Haas, which had been approved by the Rohm & Haas Board of Directors. This deal occurred during one of the toughest economic times in recent history, which eventually had a profound effect on not only the financial structuring, but also the final execution of the deal, as you will see in the pages to come. About Dow Chemical The Dow Chemical Company was founded on May 18th, 1897 when Herbert H. Dow established a plan to both manufacture and market bleach and potassium bromide on a factory scale level. In the early years of the company’s existence there was a series of pricing wars between both British and German manufacturers of bleach...
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