Dow Chemical Co
Dow also said it had agreed with its lenders to an option that could extend its loan for the deal by a year, but the size of the loan was reduced by $500 million to $12.5 billion.
Shares of both companies rose sharply after the announcement.
Rohm and Haas sued Dow in January to try to force the company to close the merger.
Dow agreed to buy Rohm and Haas last July for $78 a share, which represented a 74 percent premium, to broaden its product offerings in higher-margin markets such as paints, coatings and electronic materials.
But Dow balked at closing after a joint venture with Kuwait fell apart. Dow had intended to use proceeds from that $17.4 billion plastics joint venture to help fund the Rohm deal.
The companies said in a joint statement that they could not predict the outcome of the talks and would not comment further. The dispute is scheduled to go to trial on Monday.
When it signed the agreement with Rohm, Dow arranged for a one year, $13 billion loan from a consortium of banks. But Dow has argued that the loan was never intended to be the primary source of funding for the deal.
Dow said in a filing with the U.S. Securities and Exchange Commission on Friday that its lenders had cut the loan by $500 million and agreed to give Dow the option to extend the loan for another year, provided the company met certain conditions.
Those conditions include payment of an extension fee, reduction of the principal of the loan to less than $8 billion and compliance with a total leverage ratio.
Michael Judd, an analyst at Greenwich Consultants, said the possible extension was positive toward getting the deal done.
To the extent that they can extend, it gives them additional time to put in some additional financing, Judd said.
It probably makes it easier for the deal to go through, but conversely, he said that the extension may make Dow's task more difficult if the case does go to trial.
Dow's case hinges on the argument that the merger could be disastrous to both companies. It has said the combination of the rapidly worsening economic environment with the collapse of a high-profile joint venture with Kuwait has made completing the deal under current conditions unduly arduous.
Judd said the renegotiation of the financing for the deal could take some of the steam out of this argument, because the company would have more time to improve its financial position.
Dow already has cut jobs, slashed its dividend and said it is looking at the possible sale of 12 different assets.
Rohm and Haas has said that a course of action including assets sales, an equity issuance, and even deeper cuts to Dow's dividend could help the company fund the deal.
Dow is hoping to avoid a credit downgrade that could trigger loan defaults and limit the company's access to commercial paper.
A settlement also could keep Dow out of court in a case where many lawyers have said it holds the weaker hand.
Delaware chancery court prides itself on being the preeminent state business court in the country. They pride themselves on providing ... clarity and predictability in decisions, said Steptoe & Johnson partner John Lovi.
They are not the kind of judges or courts that would be moved by a particular factual situation to bend or change the law, he said.
Rohm shares closed up $9.79, or 18.1 percent, at $63.80 on the New York Stock Exchange. Dow shares rose more than 30 percent after the announcement. It closed up nearly 10 percent, or 64 cents, to $7.11 on Friday.
(Reporting by Michael Erman; Editing by Lisa Von Ahn, Matthew Lewis, and Carol Bishopric)