Hotchkis & Wiley Releases Misleading Press Release About Their Holdings in Dow Chemical & Rohm & Haas

When I first read this press release, I was left wondering what I was missing. How could Hotchkis & Wiley, as a Dow shareholder as intimated in this letter want a merger now? So I did some digging and guess what I found?

Here is the press release:

LOS ANGELES–(BUSINESS WIRE)–Hotchkis and Wiley Capital Management
today announced the firm has contacted Rohm and Haas Company (NYSE:ROH –
News) to express support for the closing of the acquisition of Rohm and
Haas by The Dow Chemical Company (NYSE: DOW – News) under the
contractual terms of a definitive agreement entered by Dow and Rohm and
Haas on July 10, 2008.
A large shareholder of Rohm and Haas, Hotchkis and Wiley addressed CEO
and chairman Rajiv Gupta in the following letter today:

Mr. Rajiv L Gupta
CEO and Chairman of the Board
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106

Dear Mr. Gupta,

We are writing to express Hotchkis and Wiley’s support for your efforts
to close the Dow Chemical transaction on its contractual terms. As a
recent top ten shareholder of Dow Chemical and current large shareholder
of Rohm and Haas, we are intimately familiar with the assets of both
companies. Additionally, we have undertaken a thorough analysis of the
merger agreement and Dow Chemical’s ability to finance this transaction.

Regarding the merger agreement, our conclusion is that specific
performance is warranted. We view the contract as strong and unlikely to
be improved. It is our view that Dow Chemical should honor their
commitment. However, in the event that the agreement continues to be
breached, we want to affirm your resolve to seek specific performance
along the original terms laid out in the contract. Any change to the
original contract would merely expose shareholders of Rohm and Haas to
unnecessary risks.

Dow has a variety of options available to honor the agreement on its
original terms. These options include drawing down the bridge loan,
divesting certain assets, obtaining long-term debt financing and issuing
equity. While the current financial crisis has made financing terms less
favorable than they have been in the past, options are nevertheless
available. Any one or combination of these options would provide the
capital needed to close the transaction.

The most obvious solution for Dow Chemical is to undertake an equity
offering. This option has been available to Dow since the signing of the
agreement and continues to be available today. We believe that the
current uncertainty regarding the transaction has obscured the value of
the combined entity. We have expressed to Dow Chemical our interest in
participating in an equity offering to accommodate the transaction.

Hotchkis and Wiley has a 28 year history of investing in US equity
markets. As of December 31, 2008, we managed $10.8 billion in client
assets. We look forward to being of any help possible. Please contact me
with any questions or follow up discussion.

Sincerely,
Stan Majcher
Principal and Portfolio Manager

One problem, Hotchkis and Wiley Capital Management is no longer a shareholder in Dow chemical acording to theirrecent 13H-R SEC filing.

At no time does Hotchkiss admit they no longer are Dow shareholders. Isn’t this is violation of some SEC disclosure law? Sure they say “recent top ten holder” but at no point do they admit they are “no longer a shareholder”. One could assume they were a recent top ten holder and now own a lesser percentage or recently became a top ten holder. It is open to interpretation and I think was done so on purpose.

If we look at the SEC filing Hotchkiss is in Rohm at about $69 a share. That means they are underwater in their holdings at current prices by about $15 a share. This press release is a stunning attempt to manipulate public opinion and the market through a lack of transparency….

Anyone at the SEC working today????

Disclosure (“none” means no position):Long Dow , None

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