www.mybaycity.com February 16, 2014
Business Article 8849
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BREAKUP UNWISE: Dow Criticizes Investor's Idea to Split Company

February 16, 2014
By: Dave Rogers


Dow Chemical has rejected a stockholder's idea to break the firm in two.

A recent review "found that a breakup of the company in a significant manner (simplistically described as petrochemical and specialty chemical assets) created no productivity or capital allocation improvements, but rather negatively impacted Dow's value proposition which leverages scale, integration costs and technology benefits across multiple science-based, vertically integrated value chains," Dow said in a regulatory filing last week.

"Dow believes that the specific actions it has taken to transition 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.

The statement was filed as an addendum to Dow's quarterly and full-year earnings report.

A hedge fund manager, Daniel S. Loeb, with a large stake in Dow, last month urged the company to hire outside advisers and consider a breakup. If Dow spun off its petrochemicals business, Mr. Loeb said, that would create "the specialty chemicals leader that Dow has aspired to become over much of the past decade."

Dow President and CEO Andrew Liveris, without mentioning Loeb directly, indicated that the firm has already made strategic moves along the lines Loeb suggested.

Reuter's News Service reported that Loeb's foray against Dow Chemical marks the third time in less than a year that he has demanded changes at a major global company, including asking Sony to separate its entertainment division and demanding that Sotheby's find a new chief executive officer.

Loeb broached his idea at last month's World Economic Forum in Davos, Switzerland. Both Liveris and Loeb attended the forum, though they reportedly did not meet, according to Reuters.

The company said that a breakup could actually hurt shareholders by hindering its ability to buy supplies in bulk and share scientific research.



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