Dow Chemical

(DOW) - Get Report

said Tuesday in a court document that its financial viability would be threatened if it closed its pending

Rohm & Haas

(ROH)

merger based on the deal's original terms.

Rohm & Haas filed suit against Dow Chemical in Chancery Court in Delaware after it ignored the Jan. 27 merger deadline stipulated in the deal's contract.

A 62-page document

filed on behalf of Dow Chemical by its attorneys was Dow's first response to the lawsuit.

"Forcing a merger under the present circumstances will cause irreparable harm to both Dow and Rohm & Haas," the document said. "Prudence dictates that the welfare of all legitimate stakeholders be considered and that a fair and workable solution be found."

Dow,

which earlier today reported a loss in the fourth quarter

, agreed to purchase Rohm & Haas for $15.3 billion, or $78 a share, last summer. Shares of Rohm & Haas were trading near $50 at the time. While analysts generally agreed that Rohm & Haas' unique collection of specialty chemicals would help Dow diversify beyond petrochemicals, many analysts questioned the high price that Dow agreed to pay.

Shortly thereafter, the global economy was beset by a credit-market meltdown and a severe global recession. Global chemical companies have been fighting for survival. A litany of proposed chemical projects have been delayed or canceled, including a major joint-venture between Dow Chemical and a Kuwaiti firm that was supposed to help pay for Dow's acquisition of Rohm & Haas.

"This is not a situation where Dow Chemical is trying to sneak out of a deal that it doesn't like," said Michael Foradas, partner with the law firm Kirkland & Ellis, which is representing Dow Chemical in the suit. "We are saying that the deal's current terms were negotiated before the credit markets collapsed, before the economy entered recession, and before a major source of equity financing evaporated. Closing under the existing terms puts employees and companies at risk. Those risks are unacceptable."

Rohm & Haas

issued its own statment Tuesday in a reply to Dow's motion

.

In it, the company said: "We understand that this is a difficult environment for the chemical industry. However, the difficult conditions in the chemical industry and financial markets commenced before Dow agreed to acquire Rohm and Haas and were widely expected to worsen at the time we entered into the transaction. Therefore, we insisted in our merger agreement that Dow assume both of these risks, rather than the Rohm and Haas shareholders. Dow should honor its obligations and close the transaction."