Dow Chemical Co and Rohm and Haas Co said on Friday that they were in talks about their troubled merger and the litigation stemming from it.

Shares of both companies surged after the announcement. Dow Chemical was up $1, or 15.5 percent, at $7.47, and Rohm rose $8.49, or 15.7 percent, to $62.50 on the New York Stock Exchange.

The dispute is scheduled to go to trial on Monday. Rohm and Haas sued Dow in January to try to force the company to close the takeover.

Dow agreed to buy Rohm and Haas last July for $78 a share -- 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 key joint venture with Kuwait fell apart. Dow had intended to use proceeds from that transaction -- a $17.4 billion plastics joint venture -- to help fund the Rohm deal.

(Reporting by Michael Erman; Editing by Lisa Von Ahn)

Manufacturing