Dow buys Rohm & Haas with Berkshire & Kuwait Investors

It's the breaking news on CNBC this morning: Dow Chemical is buying Rohm & Haas with the aid of Berkshire Hathaway and the Kuwaity Investment Authority (KIA) for a whopping $18.8 billion. What's most amazing about this deal are some of the ancillary statistics. Mr. Warren Buffett has only been in Sun Valley for one day and already helps close a multi-billion dollar deal. Moreover, the deal places an incredible 60% premium on Rohm & Haas, which only goes to support Mr. Buffett's age-old-saying that when he has the opportunity to make a good investment, he does it ...apparently, at any price.

The Lodge at Sun Valley 2008 has become the focus of all the world's financial media and there are more deals cooking, to be sure. While no one would be surprised if Mr. Buffett surfaces with an involvement in yet another deal, another hot topic is the discussions on-going between Larry Page of Google, Sue Ducker of Yahoo!, Bill Miller of Legg Mason (one of the largest investors in Yahoo! via various investment funds) and even Terry Semel, the ousted former chief of Yahoo!.  To be a fly on that wall!

Berkshire Will Not Grow At Rates Previously Seen

According to the man himself, Warren Buffett, you should sell your stock in Berkshire Hathaway if your expectation is to see the kinds of rates of growth that the stock has seen in the past. It's not that he believes it's a bad investment, of course, but rather that it is just so big that it's difficult to make acquisitions that would result in "needle moving" events for the holding company.

Buffett has been circling the globe of late with $35.6 billion in cash looking for deals. When you have that kind of money to spend, only truly sizable deals even show-up on the radar. Moreover, imagine how large a deal would have to be to result in significant move in the stock of Berkshire; these two forces 1) looking for large companies to buy, and 2) the fact that large companies are unlikely to offer significant growth rates, lead to Mr. Buffett's statement and it makes a lot of sense (as do most things that Mr. Buffett says).