Fitch Downgrades & Places Dow Chemical Company on Rating Watch Negative.

CHICAGO -- Fitch Ratings has downgraded the long-term ratings of Dow Chemical Company (DOW) and placed them on Rating Watch Negative following this morning's announcement that it is purchasing Rohm and Haas (ROH) for $18.8 billion which includes $3.5 billion in assumed ROH debt. In addition, the long-term ratings on Rohm and Haas has been placed on Rating Watch Negative as well. The short-term ratings of both companies have been affirmed.

Ratings downgraded and placed on Rating Watch Negative are listed below:

Dow Chemical Company

--Issuer Default Rating (IDR) to 'BBB+' from 'A-';

--Senior unsecured revolving credit facility to 'BBB+' from 'A-';

--Senior unsecured debt to 'BBB+' from 'A-'.

Ratings placed on Rating Watch Negative:

Union Carbide Corporation, a wholly owned subsidiary of Dow Chemical

--IDR 'BBB';

--Senior unsecured debt 'BBB'

Rohm and Haas Company

--IDR 'BBB+';

--Senior unsecured revolving credit facility 'BBB+';

--Senior unsecured debt 'BBB+'.

Ratings affirmed:

Dow Chemical Company

--Short-term IDR and commercial paper at 'F2'

Rohm and Haas Company

--Short-term IDR and commercial paper at 'F2'

Fitch's actions today reflect the expected increased leverage of the combined company post closing of the transaction. Given Dow's plan for the financing of the transaction, pro forma leverage (balance sheet debt/EBITDA) will rise to above 2 times (x) using the most recent latest 12 months (LTM) EBITDA from Dow and Rohm and Haas which is a more aggressive financial posture for the company than the recent past. The offer which has been approved by both boards is $78 cash for each ROH share which equates to a 74% premium over yesterday's closing price. Dow's plan to finance the funding of the $15.3 billion cash portion of the transaction include $4 billion in convertible preferred stock from Berkshire Hathaway and the Kuwait Investment Authority, an estimated $7.5 billion from expected net proceeds by year-end 2008 from DOW's contribution of certain of its petrochemical businesses into a 50/50 JV with Petrochemicals Industries Company (a subsidiary of KPC), and approximately another $4 billion in incremental debt. If the financing plans proceed as outlined balance sheet debt should rise to approximately $18 billion from $10.3 billion at March 31, 2008 which would result in debt/EBITDA of approximately 2.4x compared to Dow's 1.7x (LTM) as of March 31, 2008. The Rating Watch Negative status on the long-term ratings of both companies reflect the potential of an additional notch downgrade near closing of the transaction. Resolving the Rating Watch status will involve a final review of the financing for the acquisition and a more definitive view of the capital structure of the company. Potential negatives could include such items as delayed proceeds from the PIC JV transaction or a marked deterioration in chemical margins and cash flows.

Dow is the largest chemical company in North America, with leading market share in a number of commodity chemical segments. Chemical operations are highly integrated, resulting in cost advantages across the business cycle. Business segments are hydrocarbons and energy, basic chemicals, basic plastics, performance plastics, performance chemicals, and an expanding presence in agricultural products.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.