Dow Chemical to Buy Rohm & Haas

Updated from 9:39 a.m. EDT

Dow Chemical (DOW) agreed to buy fellow chemicals producer Rohm & Haas (ROH) in a deal worth nearly $19 billion, including debt, in a bid to accelerate its growth.

The overall value of the $78-a-share acquisition exceeds the amount Dow paid nine years ago for Union Carbide and will extend its position as the largest U.S. chemicals company. The cash portion of the arrangement is worth more than $15 billion.

The transaction, Dow said, will make it "the world's leading specialty chemicals and advanced materials company, combining the two organizations' best-in-class technologies, broad geographic reach and strong industry channels to create an outstanding business portfolio with significant growth opportunities."

Rohm & Haas closed Wednesday at $44.83, meaning the takeover price is a 74% premium. The stock has traded between $44.13 and $62.68 in the past year. After the acquisition was announced, Philadelphia-based Rohm & Haas jumped 65% to $74.15. Dow, whose market cap is above $31 billion, was down 1.3% at $33.52.

"The transaction marks a decisive move in Dow's transformation into an earnings growth company with reduced cyclicality," Dow said in a press release. Dow is reliant on petroleum to make many of its products, and the Rohm & Haas deal could mitigate somewhat the impact of high oil prices by diversifying its offerings.

On two occasions in recent weeks, Dow has raised prices in order to help offset the continued run-up in crude and the effects of the economic slowdown. The company has also cut more than 1,000 jobs.