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Markets :: Basic Chemicals :: Petrochemicals :: Ethylene

Hedge fund Third Point calls for Dow to consider spin-off of petrochemicals

11:37 AM MST | January 21, 2014 | Robert Westervelt

Hedge fund Third Point LLC (New York) said this morning that it has taken a stake in Dow Chemical and urged management to evaluate a spinoff of its petrochemical operations....

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Comments (4) for Hedge fund Third Point calls for Dow to consider spin-off of petrochemicals
The investment community always seems to choose pulling companies apart versus improving their management. Dow might, as stated, performed poorly as a management team but I am not convinced, nor is BASF I believe, that separating the business into its component parts is always the answer. And the notion of Dow becoming only a specialty chemical company rather than a diversified chemical player with strong franchises in the positions it holds (exiting PP but keeping PE) is different than cutting off all of its petrochemicals. The choice should reflect long term strategic positioning and solid operation of the business and not simplistic separation of commodity from specialty businesses, nor should it be only about the financial engineering of a company for the short term gains from manipulation of the business portfolio.
Posted by David Hurwitz on Tuesday, January 21, 2014 @ 01:42 PM
DOW had indeed underperformed. Its CEO should have been summarily dismissed at the time of the Rohm & Haas commitment while still exposed to rejection of its Kuwait plans. This was a world-class blunder! Instead, He received the highest compensation of any executive in the chemical industry. The Board of Directors should be ashamed of itself.
Posted by Chemical Agent on Tuesday, January 21, 2014 @ 02:55 PM
Dow should be urged to extract the value from its value-creating businesses - those specialities it has wanted to develop and focus on. There is a huge amount still to be done there.
Divesting petchems is a red herring.
Posted by Phil Allen on Tuesday, January 21, 2014 @ 03:20 PM
This appears to be nothing more than a shake down of Dow. I have no doubt that Third Point will offer its services to Dow for a "modest fee" and take part in its spin off. I have worked for private equity owned chemical companies, and they were operated only as AMT for the boys in New York.
Posted by Les Manuel on Wednesday, January 22, 2014 @ 01:56 PM

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