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Dow, investors tussle over Dow Corning’s future

Activist investors want a better breakup plan for the DowDuPont split

by Alexander H. Tullo
August 3, 2017 | A version of this story appeared in Volume 95, Issue 32

Credit: Dow Chemical
Andrew N. Liveris
A photo of Andrew N. Liveris.
Credit: Dow Chemical
Andrew N. Liveris

As Dow Chemical and DuPont draw closer to consummating their merger later this month, they are facing mounting pressure to amend their plan to break up the new firm, DowDuPont.

In May, Third Point, an investment fund operated by activist investor Daniel S. Loeb, put out a report arguing that the Dow Corning silicones business should be allocated to the future specialty products company, which will have headquarters in Wilmington, Del. Currently, the business is slated for what is to be a materials science company based in Midland, Mich., which would be composed mostly of the current Dow Chemical.

Another Dow shareholder, Glenview Capital Management, has also been public about its concerns.

Now, according to an article in the Wall Street Journal on July 30, investment firm and Dow shareholder Jana Partners and DuPont investor Trian Fund Management have consulted with Dow and DuPont management about the breakup plan.

In June, Dow and Dupont hired the consulting group McKinsey & Co. for a review, expected to be completed within a month and a half, of the breakup.

Dow insists Dow Corning would be a better fit in the materials science firm. Dow is bumping up its synergy target for the merger with the silicones business from $400 million annually, its best guess a year ago, to $650 million, largely due to the integration between it and the rest of Dow Corning.

“This is such a fit into the materials science company, it bears no recognition to what any other company could have done,” says Dow Chief Executive Officer Andrew N. Liveris.


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