Tuesday, December 30, 2008

Dow Chemical (NYSE:DOW): Cough up the cash or else...

I just wanted to do a quick follow-up to the Dow Chemical (NYSE:DOW)/ Rohm & Haas (NYSE:ROH) story:

Barclays' Risk Arbitrage Team is out with a call saying they believe there are significant restrictions on Dow’s ability and incentives to maneuver its way out of the deal or into a price cut. They find the current risk-reward attractive and expect the deal to be completed on its current terms.

Notablecalls: So this means DOW will have to buy ROH for $78 per share in cash? Sure looks like it.

Also, note that according the the initial agreement, if the merger is not completed by January 10, its price rises every day by a fixed amount to compensate Rohm investors for the delay.

So if DOW does not cough up the cash by Jan 10, the deal will get more expensive for them. A really cruelsome situation to be in.

As the old adage goes - In the best times the worst deals are made.

PS: Notable Calls Network (NCN) had a very similar Barclays call already yesterday saying there was very little DOW could do in terms of backing out of the deal. Rohm & Haas (ROH) stock was trading around $49 and change when the call was issued. It shot up $54.5 over the next couple of hours and I see fills around $55 this AM.

So a 4+ pt gain was to be had, depending on ones entry/exit. Any size.

This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Not all calls are this good (we get many wrong as well) but NCN is for the pros. You decide which calls to take and which one's to leave.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.

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