July 11, 2008 12:38 am Dow Chemical agrees to buy rival Rohm and Haas DETROIT (AP) — Dow Chemical Co. has agreed to buy rival Rohm and Haas Co. for more than $15 billion in cash in a deal that Dow hopes will fuel its growth in a more lucrative wing of the chemical-making business. "The addition of Rohm and Haas' portfolio is game-changing for Dow," Chairman and Chief Executive Andrew Liveris said yesterday in a statement announcing the deal. The $78 per-share deal includes money from a Kuwaiti sovereign wealth fund and Warren Buffett's Berkshire Hathaway. The price represents a 74 percent premium to Philadelphia-based Rohm and Haas' closing share price of $44.83 on Wednesday. The Haas family, descendants of one of the company's founders, holds about 65 million shares, a 33 percent stake worth nearly $5.1 billion based on the purchase price. Chief Financial Officer Geoffery Merszei said the quality and reputation of Rohm and Haas' businesses, brands, products and technologies — as well as its work force — make the premium worth paying. — Fed chief: Gov't needs more power when firms fail WASHINGTON (AP) — The nation's top economic officials urged Congress yesterday to give them new regulatory tools to better protect the country from economic and financial havoc if a major Wall Street firm were to fail. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson made the recommendations in a joint appearance before the House Financial Services Committee as fresh worries gripped investors about the financial shape of mortgage giants Fannie Mae and Freddie Mac as well as investment bank Lehman Brothers Holdings Inc. Both Bernanke and Paulson endorsed creating new procedures by which the government can guide an orderly liquidation of a failing investment bank in an effort to minimize any fallout that might be inflicted on the broader financial system and the overall economy. Such procedures, which are in place for commercial banks, might have made the dissolution of investment firm Bear Stearns more orderly. Although Bernanke defended the Fed's controversial decision to financially back JP Morgan Chase's takeover of the Bear Stearns, the Fed chief said, "This is not something I want to do again" were other investment firms to falter. — Wall Street gains amid financial worries NEW YORK (AP) — Wall Street stumbled through another volatile session but ended with a respectable gain yesterday after a multibillion dollar deal between Dow Chemical and rival Rohm and Haas helped offset concerns about the financial sector and energy costs. Shares of mortgage finance companies Fannie Mae and Freddie Mac skidded lower on worries they will be forced to sell more new shares than anticipated to compensate for losses from the housing slump. Several retail banks and investment banks also dropped, particularly Lehman Brothers Holdings Inc. The declines in financials came after Treasury Secretary Henry Paulson told Congress Wall Street can't expect the government to bail out troubled financial companies. Meanwhile, crude oil prices rebounded by more than $5 to more than $141 a barrel. Though investors found a reason to buy after Dow Chemical's $15 billion all-cash acquisition of the special chemicals maker Rohm and Haas, they are cautious ahead of quarterly earnings, in particular financial results due next week. — Retailers face challenging back-to-school season NEW YORK (AP) — Consumers, armed with government rebate checks, still have eyes only for heavily discounted items and necessities, and the critical back-to-school season is looking like another difficult period for the nation's retailers. U.S. retailers yesterday reported better-than-expected June sales results, providing some relief to merchants, particularly discounters. In fact, Wal-Mart raised its earnings outlook based on robust results. But even the extra cash from the government's stimulus checks failed to spur major splurges, leaving experts to predict a return to overall sluggish sales when the last of the checks are mailed this week. Parents are expected to stick to the basics like notebooks and jeans. That may mean no $100 suede backpacks, fewer new tops for the kids and $2 pens might seem like too big a splurge. More children may have to wear hand-me downs passed down from their older siblings. — Fannie, Freddie sink on government rescue fears WASHINGTON (AP) — Fears that the government will be forced to rescue Fannie Mae and Freddie Mac could well become a self-fulfilling prophecy. Shares of the government-chartered mortgage finance giants plummeted yesterday and are trading at levels last seen in the early 1990s. If the prices don't recover, it will be harder for the two companies to raise more money through stock sales to compensate for losses from the housing bust. Investors are afraid their stakes will vanish if the government is forced to rescue the companies. Freddie Mac shares fell $2.26 or 22 percent, to $8, after sinking as low as $6.75 earlier in the day. Shares of Fannie Mae fell $2.11, or 13.8 percent, to $13.20, after earlier falling to $11.70. Testifying on Capitol Hill, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sought to calm investor jitters about the financial health of Fannie and Freddie. — Toyota making US manufacturing changes DETROIT (AP) — Toyota Motor Corp., the seemingly unstoppable juggernaut that saw its U.S. sales double in the last decade, has come back down to earth. Stung by rare double-digit sales declines and burdened by a growing inventory of slow-selling pickups, Toyota said yesterday it will start producing the Prius hybrid in the U.S. and will shut down truck and SUV production to meet changing consumer demands. Toyota was the latest automaker to announce major production changes in response to lagging U.S. auto sales. Industrywide, sales have dropped 10 percent in the first six months of this year and are moving at their slowest pace in more than a decade. High gas prices have accelerated the drop in pickup and sport utility vehicle sales faster than automakers had predicted, and they're scrambling to keep up with demand for smaller, more fuel-efficient cars. Toyota said the moves will not affect any full-time workers, who will get training and do other projects during the shutdown. But the company is laying off around 700 temporary workers at the affected plants. — Oil rebounds as Iran tensions flare NEW YORK (AP) — Oil prices rebounded by more than $5 a barrel yesterday, as another missile launch by Iran stoked worries that escalating political tensions in the Middle East could cut off supplies out of the region. A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch. The mounting hostilities drew buyers back into the jittery energy markets, said John Kilduff, senior vice president of risk management at MF Global LLC. OPEC's secretary general said yesterday that the oil producing group will not be able to replace any shortfalls if Iran is attacked and takes its crude supplies off the market. The fear is that Iran could block the Strait of Hormuz, a passageway that handles about 40 percent of the world's tanker traffic. — Jobless claims dip but labor market still weak WASHINGTON (AP) — Fewer people signed up for unemployment benefits last week, but the dip was not enough to overcome continuing weakness in the country's labor market. The Labor Department reported yesterday that new applications filed for unemployment insurance fell by a seasonally adjusted 58,000 to 346,000 for the week ending July 5. A year ago, the figure was lower, at 304,000, showing a deterioration in employment conditions. A government analyst cautioned that last week's drop did not suggest a sudden improvement in the country's overall economic health. The decline was exaggerated because of adjustment problems related to temporary shutdowns at auto plants for retooling new assembly lines. The unadjusted, or actual raw figures, showed an increase of 30,000 claims for last week. Employers have been chafing under high energy prices and fallout from the housing and credit crises. As they try to cope with those problems and squeezed profits, they have cut back on hiring and other types of investments.
By The Associated Press The Dow Jones industrial average finished up 81.58, or 0.73 percent, at 11,229.02. Oil's resurgence back above $141 a barrel briefly pulled the Dow into negative territory in afternoon trading. Broader stock indicators also finished higher. The Standard & Poor's 500 index gained 8.70, or 0.70 percent, to 1,253.39, while the Nasdaq composite index rose 22.96, or 1.03 percent, to 2,257.85. Light, sweet crude for August delivery soared $5.60 to $141.65 a barrel on the New York Mercantile Exchange. It was crude's largest daily leap since June 6, when the July contract jumped by $10.75 a barrel. On the Nymex, gasoline futures added 13.01 cents to settle at $3.5109 a gallon. Natural gas futures on the Nymex rose by 29.4 cents to settle at $12.30 per 1,000 cubic feet. The Energy Department said yesterday that natural gas stored in the U.S. increased last week but remains 3.1 percent below the five-year average for this time of year. Brent crude on London's ICE futures exchange rose $5.45 to $142.03 a barrel.
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