The case, brought by Philadelphia's Rohm & Haas Co., will be one of the most closely followed business litigations of early 2009 and infused with drama because of the nasty, and worsening, economic climate.
The government said Friday that the nation's gross domestic product plunged late last year at the sharpest rate since 1982 on weak auto sales and business investment.
Dow Chemical Co., the nation's largest chemical company, has warned that it could cut its dividend for the first time since 1912. Its earnings, expected Tuesday, could give a frightening view of business conditions in December.
David Bernick, a lawyer representing Dow, painted a devastating picture for Chandler of what could happen if Dow were forced to complete the $15.2 billion merger negotiated in July with Rohm & Haas.
The merger would create a corporate entity that is so "hobbled financially" that it would offer "no light at the end of the tunnel" for 60,000 employees, thousands of them in Philadelphia, Bernick told Chandler and Rohm & Haas attorneys in phone conversations last week. His comments were contained in court transcripts.
"This deal faces a very, very big problem," Bernick said. The combined company could "ultimately lead to the deterioration of two of America's finest and longest-standing chemical companies."
The Rohm & Haas purchase price is now larger than the stock market capitalization of Dow Chemical, Bernick noted, and Dow is trying to renegotiate a $13 billion loan with its banks. Dow signed the Rohm & Haas merger deal when oil prices were more than $120 a barrel.
Dow's plans for Rohm & Haas were thrown into chaos in December when the Kuwait government axed a proposed joint venture that would have provided Dow Chemical with $7 billion to $9 billion in cash.
