Dan Loeb to Call for Changes to Dow-DuPont Post-Merger Plan--Update
May 24 2017 - 12:07PM
Dow Jones News
By David Benoit
Tensions between activist investor Dan Loeb and Dow Chemical Co.
are spilling back into the open.
After a year of peace, Mr. Loeb plans to publicly push for
changes to the complicated combination and breakup of Dow Chemical
and DuPont Co., according to a presentation reviewed by The Wall
Street Journal.
The two chemical giants announced their megadeal in late 2015,
saying they would briefly combine their sprawling business before
splitting the merged operation into three public companies:
agriculture, materials and specialty products.
But earlier this month Dow and DuPont announced they were
reviewing that plan following shareholder pressure to alter the
makeup of the three new companies.
Mr. Loeb's presentation essentially says the current plan to
split up the businesses doesn't go far enough to break apart Dow,
echoing other investors and analysts. He first took a stake in Dow
in 2014 and pressed for it to break up.
In a statement, the companies said they "are fully aligned
regarding the objective of the review, and we continually solicit
and welcome input from our owners."
Mr. Loeb's Third Point LLC is pushing the companies to shift
businesses between the planned materials company, known as Dow 2.0,
and the specialty chemicals company, according to the presentation.
The hedge fund wants the specialty company to be formed by four
units that themselves could be separated or sold off, the
presentation says.
Third Point's plan would shift businesses that generate $3.7
billion in earnings before interest, taxes, depreciation and
amortization to the specialty business, while a smaller set of
businesses with some $300 million in Ebitda would move from
specialty to materials.
The presentation estimates Mr. Loeb's plan would create some $20
billion and lead to additional cost cuts.
Mr. Loeb's decision to go public after the companies announced
they were reviewing the postmerger plan signals he remains
concerned about Dow's decision making.
After the merger was struck in 2015, Mr. Loeb publicly called
for Dow Chief Executive Andrew Liveris to step down. The two sides
brokered a compromise that Mr. Liveris would step down this year
after the deal closed. With the deal delayed by regulatory matters,
Dow announced this month Mr. Liveris would stay through April 1 of
next year.
Mr. Loeb's relationship with Mr. Liveris has improved in the
past year, people familiar with both sides have said.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
May 24, 2017 11:52 ET (15:52 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
DuPont de Nemours (NYSE:DD)
Historical Stock Chart
From Apr 2024 to May 2024
DuPont de Nemours (NYSE:DD)
Historical Stock Chart
From May 2023 to May 2024