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Dow Chemical formally rejects breakup proposal

02.12.2014  | 

The review by the board, management team and external advisers found that creating separate petrochemical and specialty-chemical businesses would negatively affect Dow’s “value proposition".

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By JACK KASKEY
Bloomberg

Dow Chemical, facing pressure from Dan Loeb’s Third Point to split itself in two, said an internal strategic review concluded that such a move would reduce the value of the largest US chemical company.

The review by the board, management team and external advisers found that creating separate petrochemical and specialty-chemical businesses would negatively affect Dow’s “value proposition,” the Midland, Michigan-based company said in a regulatory filing. A breakup also wouldn’t improve productivity or capital allocation, Dow said.

Third Point, an activist investor founded by Loeb, said in a Jan. 21 letter that Dow is its top holding and could add billions of dollars to earnings by spinning off commodity chemicals and plastics. Dow CEO Andrew Liveris defended his strategy of integrating commodity chemicals with specialty products during a Jan. 29 conference call.

“Dow believes that specific actions it has taken to transform Dow from a commodity-based model into a vertically integrated science company focused on specialty materials, agriculture and specialty plastics is the right strategy to maximize value for all of our shareholders in the short and long term,” the company said in the filing.



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