Rohm and Haas Company (NYSE: ROH) shares surged over 65 percent today after rival Dow Chemical (NYSE: DOW) agreed to purchase the company for $15.3 billion. The $78 per share takeover deal includes funds from a Kuwaiti sovereign wealth fund and Warren Buffett's own Berkshire Hathaway. The 74 percent premium may seen hefty to some shareholders, but Dow Chemical executives insist that the strong brands and technologies make the premium worth paying.

The acquisition represents Dow Chemicals' efforts to expand higher-margin specialty chemical markets, which can help protect it from the ups and downs of basic chemical sales. Recently, the company has been struggling with the performance of its basic businesses due to increases in raw material costs that it has tried to pass on to consumers. This deal will make Dow the largest specialty chemical and advanced materials company in the world.

So, just how much will this magic deal help Dow in the future? Well, some analysts are expecting a big boost. Before the deal, analysts have been expecting Dow to earn around $3.50 per share in 2010 and 2011 during the industry trough, but now they are expecting around $4.50 per share. Meanwhile, in 2015 when dow forecasts the peak, EPS is expected to exceed $10 per share. Meanwhile, Dow expects to realize pretax annual cost synergies of at least $800 million per year.

In the end, many investors view this as a very positive move and do not believe that Dow overpaid. The company has entered into a higher-margin business, which should boost growth and earnings multiples. Meanwhile, the move also helps the company realize cost benefits through economies of scale.

Related Companies
Albemarle Corporation (ALB)
DuPont Company (DD)
Hercules Incorporated (HPC)
PolyOne Corporation (POL)
Eastman Chemical Company (EMN)
Lubrizol Corporation (LZ)

The car market may be hurting in the United States, but sales in Europe are booming for at least one U.S. company. General Motors (NYSE: GM) reported record sales of nearly 1.2 million vehicles in Europe for the first six months of the year. Sales grew 58% in Eastern Europe and 60% in Russia, which offset a weaker market in Spain and Italy.

General Motors has been struggling in the United States recently thanks to a slowdown in the housing market and consumer spending. The result has been an environment where consumers are pinching pennies and loans are difficult to obtain even for qualified buyers. As a result, GM has cut many jobs and taken other measures to reduce costs to salvage its earnings.

The Wall Street Journal also published an interesting piece today pointing out the only way for General Motors to emerge from this mess may be bankruptcy. The automaker is not only too large right now, but also employs too many people in too strong of a union. These are problems that aren't easy to circumvent, especially when it needs $15 billion just to make it to 2010.

General Motors shares are down more than 70% during the past 52-weeks and continue to struggle. European sales may be doing very well these days, but the market is simply too small to make a material difference. And a turnaround in the way it operates in the United States may be too costly to undertake and too difficult with unions.

Related Companies
Toyota Motor Corporation (TM)
Ford Motor Company (F)
Honda Motor Co. Ltd. (HMC)
American Axle (AXL)
Diamler AG (DAI)
Nissan Motor Co. Ltd. (NSANY)
PACCAR Inc. (PCAR)

VMWare Inc. (NYSE: VMW) announed this morning that its co-founder and chief executive, Diane Greene, is leaving the company. Ex-Microsoft executive, Paul Maritz, is set to replace her as the head of one of the most popular technology companies in the market. Predictably, the stock moved down $13 - or 25% - on the news.

VMWare also took the opportunity to lower its financial expectations for the year, since the stock was already going to be down on news of the departure. The company said it expects revenues for the full year of 2008 to come in modestly below the previous guidance of 50% growth over 2007; however, the company did not update its guidance with specific numbers for Q2.

VMWare was one of the hottest IPOs ever one Wall Street before the economy turned south last year. The company is a provider of virtualization solutions from the desktop to the data center. The company's suite of virtualization solutions addresses a range of information technology problems that include infrastructure optimization and desktop management.

Many investors are now wondering whether or not the drawdown today went too far. The departure of Ms. Greene was a long time in coming due to a lot of friction between VMWare and its former parent company EMC. Greene had had a lot of leeway within the company because VMWare was somewhat of a golden egg for the company. However, her failure to perform caused friction.

Some investors are bullish on news of new blood within the executive ranks. Meanwhile, the growth prospects for VMWare remain relatively strong despite the slowdown in technology spending on the part of corporations. The technology itself is used to reduce costs and improve performance, which is why the company used the word "modest" in its statement.

In the end, it will be interesting to see just how much VMWare can fall before investors take into account future growth and realize its relatively low valuation - for a tech company - of 68x earnings. Some are even saying that it could become an eventual takeover target for a larger business technology firm looking to move into the high growth virtualization arena.

Related Companies
Microsoft Corporation (MSFT)
Citrix Systems (CTXS)
EMC Corporation (EMC)
Hewlett-Packard Company (HPQ)
Novell Inc. (NOVL)
BMC Software, Inc. (BMC)
Sun Microsystems (JAVA)
Oracle Corporation (ORCL)