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  • 1. Crystallizing Dow’s Transformation: The Acquisition of Rohm and Haas Andrew N. Liveris Chairman and Chief Executive Officer July 10, 2008
  • 2. SEC Disclosure Rules ► Some of our comments today may include statements about our expectations for the future. Those expectations involve risks and uncertainties. Dow cannot guarantee the accuracy of any forecasts or estimates, and we do not plan to update any forward-looking statements if our expectations change. If you would like more information on the risks involved in forward-looking statements, please see our annual report and our SEC filings. ► In addition, some of our comments may reference non-GAAP financial measures. Where available, a reconciliation to the most directly comparable GAAP financial measures and other associated disclosures are provided on the internet at www.dow.com in the Financial Reports page of the Investor Relations section. July 10, 2008 2
  • 3. July 10, 2008 3
  • 4. Dow’s Strategy JOINT JOINT VENTURES VENTURES Products MARKET Solutions BASICS PERFORMANCE FEEDSTOCKS FEEDSTOCKS FACING JOINT Systems JOINT VENTURES VENTURES Technology and R&D • Grow Performance and Specialties • Strengthen competitiveness of Basics July 10, 2008 4
  • 5. CEO Priorities for 2008 ►Maintain focus on financial discipline ►Close on PIC joint venture ►Transform our earnings profile July 10, 2008 5
  • 6. Rohm and Haas ► Premier advanced materials and specialty chemicals company ► 2007 sales of $8.9 billion ► Leading positions in electronics and coatings ► Headquartered in Philadelphia, located in 27 countries ► 15,700 employees ► Established in 1909 July 10, 2008 6
  • 7. The Ideal Company for Dow’s Transformation ► High quality global advanced materials company with a rich heritage ► Attractive presence in innovative specialty businesses ► Impressive financial profile ► Global reach into emerging markets ► Well-established culture of innovation ► Strong, experienced leadership team July 10, 2008 7
  • 8. Game Changing Transaction ►A defining step in Dow’s transformation to a high growth, diversified chemicals and materials company ►An unbeatable combination – building on strengths of each other ►A highly sought after and previously unobtainable enterprise ►Creates the global leader in specialty chemicals and advanced materials ►A world class portfolio with significant growth synergies ►Delivers significant value for all shareholders July 10, 2008 8
  • 9. Portfolio Transformation 2007 Revenues 31% 49% 51% 69% Dow As Is Pro Forma Dow Post PIC JV / Rohm and Haas 2007 EBITDA 33% 48% 52% 67% Dow As Is Pro Forma Dow Post PIC JV / Rohm and Haas Performance Basics Data Excludes Unallocated July 10, 2008 9
  • 10. A Powerful New Dow Feedstock-Driven Businesses Market-Driven Businesses Rohm and Haas Chemicals, Asset Light Performance Health & Advanced Petrochemicals Joint Products Agriculture Materials & Feedstocks Ventures Electronic Specialty Coatings Materials Materials Industry GDP 5% 6-8% >8% Growth Rates July 10, 2008 10
  • 11. Strategic Rationale ► Accelerates growth through strong operational and strategic fit ► Creates new leadership positions in key industry growth segments ► Opens new channels for existing products and technologies ► Strengthens presence in rapidly developing economies ► Fuels innovation engine ► Delivers more stable earnings with higher growth July 10, 2008 11
  • 12. SIGNIFICANT Growth Synergies 12
  • 13. Growth Synergies ► $2.0 – $2.6 billion in additional value creation – Broader product portfolio, technologies, geographic reach and market channels – Enhanced leadership positions in key industry segments ► $1.7 billion combined R&D investment – Among the largest in the industry ► Key opportunities for growth – Electronic Materials − Specialty Chemicals – Coatings − Specialty Packaging July 10, 2008 13
  • 14. Growth in Electronic Materials Advanced electronic low K Next Generation Advanced electronic low K Next Generation Leader in Photoresist Materials Leader in Photoresist Materials Technology (SiLK) Integrated Circuits Technology (SiLK) Integrated Circuits Next Generation Next Generation Integrated Circuits Integrated Circuits Epoxy Resin Technology Printed Circuit Board Materials Epoxy Resin Technology Printed Circuit Board Materials Packaging Packaging Advanced Display Advanced Display Polymer Science Polymer Science Display Films Display Films Films & Materials Films & Materials Advanced Ancillary State of the Art High Throughput Advanced Ancillary State of the Art High Throughput Electronic Process Chemicals Electronic Process Chemicals Electronic Chemicals Research Capabilities Electronic Chemicals Research Capabilities July 10, 2008 14
  • 15. Growth in Coatings Accelerated Growth in High Throughput Research Accelerated Growth in High Throughput Research Acrylic Latexes Acrylic Latexes New Applications Capabilities New Applications Capabilities Most Innovative Next generation Epoxy Waterborne Most Innovative Next generation Epoxy Waterborne Materials Offering and Polyurethane Technology Coating Materials Materials Offering and Polyurethane Technology Coating Materials High Performance Leading Position in Next generation High Performance Leading Position in Next generation and Lowest Cost Acrylic Market Segments process Technology and Lowest Cost Acrylic Market Segments process Technology Leading Position in Leading Technologies Leading Position in Leading Technologies Unique Chemistries Unique Chemistries Coating Materials and Market Position Coating Materials and Market Position July 10, 2008 15
  • 16. Growth in Specialty Packaging Low Energy Substrate Adhesives Performance Low Energy Substrate Adhesives Performance Differentiated Adhesives Differentiated Adhesives and Olefin Block Co-Polymers Adhesives and Olefin Block Co-Polymers Adhesives Growth in Growth in Specialty Acrylates Advanced Polymers Specialty Acrylates Advanced Polymers Differentiated Products Differentiated Products High Throughput Accelerated High Throughput Accelerated Formulation Technology Formulation Technology Research Capabilities Development Research Capabilities Development Building and Construction Market Building and Construction Market Broad Technology Platform Broad Technology Platform Channel Access Pull-through Channel Access Pull-through July 10, 2008 16
  • 17. Growth in Specialty Chemicals Faster Growth in Faster Growth in Cellulosics and Cellulosics and Acrylate Chemistry Specialty Polymers Acrylate Chemistry Specialty Polymers Polymer Chemistry Polymer Chemistry for Personal Care for Personal Care Acrylic and Urethane Enhanced Portfolio of Leading Polyurethane and Epoxy Acrylic and Urethane Enhanced Portfolio of Leading Polyurethane and Epoxy Specialty Adhesives Adhesive Materials Technology and Market Position Specialty Adhesives Adhesive Materials Technology and Market Position Growth in Growth in Ion Exchange Water Purification Membranes Ion Exchange Water Purification Membranes Water Treatment Water Treatment Resin Technology and Components Resin Technology and Components and Purification and Purification High Performance High Throughput High Performance High Throughput Formulation Capabilities Formulation Capabilities Specialty Chemicals Research Capabilities Specialty Chemicals Research Capabilities July 10, 2008 17
  • 18. Geographic Synergies ► Leverages Dow’s asset light advantages ► Creates the largest R&D capability in China ► Builds on complementary strengths in emerging geographies Asia Pacific: Dow 11 percent of sales Rohm and Haas 22 percent of sales Latin America: Dow 11 percent of sales Rohm and Haas 4 percent of sales July 10, 2008 18
  • 19. A Highly Disciplined Approach ► Excellent strategic fit ► World class high quality enterprise ► Meets all of Dow’s acquisition criteria ► Significant cost synergies ► Powerful growth synergies July 10, 2008 19
  • 20. Financials Geoffery E. Merszei Executive Vice President and Chief Financial Officer 20
  • 21. Transaction Summary ► Dow to acquire Rohm and Haas for $78 per share ► Dow to acquire Rohm and Haas for $78 per share Price ► 47.9% premium to Rohm and Haas 60-day average price ► 47.9% premium to Rohm and Haas 60-day average price Premium ► 28.7% premium to its 2008 closing high ► 28.7% premium to its 2008 closing high ► Unanimously approved by both Boards of Directors ► Unanimously approved by both Boards of Directors ► Shareholders of 32% of Rohm and Haas stock, including Haas family ► Shareholders of 32% of Rohm and Haas stock, including Haas family Approvals representatives, have entered into agreements to support the transaction representatives, have entered into agreements to support the transaction ► $3 billion equity investment by Berkshire Hathaway and $1 billion by Kuwait ► $3 billion equity investment by Berkshire Hathaway and $1 billion by Kuwait Investment Authority Financing Investment Authority ► Debt financing committed by Citi, Merrill Lynch and Morgan Stanley ► Debt financing committed by Citi, Merrill Lynch and Morgan Stanley ► Rohm and Haas shareholders’ approval ► Rohm and Haas shareholders’ approval Key Conditions ► Customary regulatory approvals and conditions ► Customary regulatory approvals and conditions & Timing ► Closing expected by early 2009 ► Closing expected by early 2009 July 10, 2008 21
  • 22. Comparable Transactions FV / LTM FV / LTM EBITDA EBITDA including cost Acquirer / Target synergies(1) BASF / Engelhard 12.4x 9.6x Akzo Nobel / 10.9x 8.5x Imperial Chemical Industries PPG / SigmaKalon 11.8x 7.8x Dow Chemical / 11.5x (2) 7.7x (2) Rohm and Haas (1) Includes run-rate synergies $200mm for BASF, $375mm for Akzo Nobel, $100mm for PPG, and $800mm for Dow Chemical. (2) Assumes 2008E EBITDA of $1,645 million. July 10, 2008 22
  • 23. Significant Cost Synergies ► At least $800 million in annual pre-tax synergies ► Phased in over two years Purchasing Synergies Including Raw Materials Shared Services and Governance 35% 35% 35% 35% 10% 10% 20% 20% Corporate Business Manufacturing / Supply Chain Development Overlap Work Process Improvements July 10, 2008 23
  • 24. Dow Synergy Track Record Cost synergies as a percent of target revenue Union Carbide 18% delivered Rohm and Haas Ag 16% delivered Angus Chemicals 15% delivered EniChem Polyurethanes 14% delivered Gurit-Essex 16% delivered Rohm and Haas 9% target July 10, 2008 24
  • 25. Shareholder Value Creation ► Accelerates revenue growth and improves margins – Increases percentage of revenues from higher margin, higher growth specialty business – Reduces volatility and increases growth in earnings 2007 – 2012 Industry Growth Rates Dow 4% Rohm and Haas 5 – 9% Dow + Rohm and Haas 5 – 7% SOURCE: SRI Consulting, CMAI, Company filings and presentations July 10, 2008 25
  • 26. Shareholder Value Creation Meets all Dow acquisition criteria and maximizes long-term shareholder value ► Strong operational and strategic fit ► Meaningfully accretive to earnings in second year of transaction ► Significant synergy opportunity ► Exceeds internal return requirements July 10, 2008 26
  • 27. Retains Financial Flexibility ► Attractive and diverse transaction funding – Deploy proceeds from PIC joint venture – Equity investment by Berkshire Hathaway and Kuwait Investment Authority – Debt funding (bridge) provided by Citi, Merrill Lynch and Morgan Stanley ► Maintains solid investment grade credit rating July 10, 2008 27
  • 28. Summary 28
  • 29. Leveraging Rohm and Haas Strengths ► Advanced Materials business unit headquartered in Philadelphia ► Customer, market focus and innovative culture of Rohm and Haas will be preserved and leveraged ► Rohm and Haas corporate name retained for Dow’s new Advanced Materials division ► Add complementary Dow businesses to create a ~$13 billion Rohm and Haas Advanced Materials portfolio July 10, 2008 29
  • 30. A Powerful New Dow Feedstock-Driven Businesses Market-Driven Businesses Asset Light Rohm and Haas Chemicals, Performance Health & Joint Advanced Petrochemicals Products Agriculture Ventures Materials & Feedstocks Electronic Specialty Coatings Materials Materials July 10, 2008 30
  • 31. A Powerful New Dow 2/3 Specialties Feedstock-Driven Businesses Market-Driven Businesses Asset Light Rohm and Haas Chemicals, Performance Health & Joint Advanced Petrochemicals Products Agriculture Ventures Materials & Feedstocks Electronic Specialty Coatings Materials Materials July 10, 2008 31
  • 32. A Powerful New Dow 2/3 Specialties Feedstock-Driven Businesses Market-Driven Businesses Asset Light Rohm and Haas Chemicals, Performance Health & Joint Advanced Petrochemicals Products Agriculture Ventures Materials & Feedstocks Electronic Specialty Coatings Materials Materials Adv. Elec. Dow Coating Materials Solutions Designed Specialty Epoxy Polyurethane Polymers Packaging Systems Systems July 10, 2008 32
  • 33. A Powerful New Dow 12 >$10.00 Earnings per Share 8 Prior $4.37 Target 4 $3.50 $0.34 0 2002 (Trough) 2005 (Peak) Next Industry Next Industry Trough Peak (2010/2011) (2015) July 10, 2008 33
  • 34. A Powerful New Dow 12 >$10.00 Earnings per Share 8 With Rohm $4.37 and Haas ~$4.00 4 $3.50 $0.34 0 2002 (Trough) 2005 (Peak) Next Industry Next Industry Trough Peak (2010/2011) (2015) July 10, 2008 34
  • 35. Game Changing Transaction ► A defining step in Dow’s transformation to a high growth diversified chemicals and materials company ► An unbeatable combination – building on strengths of each other ► A highly sought after and previously unobtainable enterprise ► Creates the global leader in specialty chemicals and advanced materials ► A world class portfolio with significant growth synergies ► Delivers significant value for all shareholders July 10, 2008 35
  • 36. July 10, 2008 36