Dow Investor Glenview Calls for Changes in Post-DuPont Merger Breakup
June 27 2017 - 6:23PM
Dow Jones News
By David Benoit
Another big investor is calling for revisions to the landmark
proposed merger of Dow Chemical Co. and DuPont Co.
Glenview Capital Management LLC recently met with leaders of
both companies and pushed for changes in a plan to break the
combined group into three parts, according to a letter the hedge
fund sent to its investors late Tuesday.
The fund also criticized Dow's decision to delay the retirement
of Chief Executive Andrew Liveris, who was originally supposed to
step down around now but now plans to stay on longer, according to
the letter, which was reviewed by The Wall Street Journal. Glenview
believes the delay and the current split plan will impact Dow's
ability to find a new leader.
The chemical giants announced their roughly $60 billion merger
in December 2015. Shareholders approved it last July and after a
delay winning regulatory approval are now expected to complete the
deal in August. Within 18 months of completion, the behemoth is
supposed to split into three companies: one agricultural, one
focused on materials and another on specialty-chemical
products.
Investors have grown wary of the details of the breakup plan and
the companies said in May they would review it. Dow and DuPont have
said they "are fully aligned regarding the objective of the review"
and would consult with investors. The companies had no immediate
comment Tuesday.
Glenview's letter says it owns about $1 billion of Dow stock,
amounting to less than 1% of the company's total value. The fund,
which isn't typically a public activist, said in the letter that it
largely supports the roadmap Daniel Loeb's Third Point LLC detailed
last month in a presentation. The activist, another Dow investor,
called for shifting nearly a third of the earnings from the
proposed materials business to the specialty-products
operation.
Trian Fund Management LP, another activist that's a big DuPont
shareholder, has also privately pushed for changes, as have other
investors and analysts, people familiar with the matter have
said.
In general, the investors argue that the materials company
should be a more commodity-focused business that would trade at
lower multiples, while the specialty business could comprise a mix
of higher-margin chemical and other products.
Glenview's letter raises Mr. Liveris's tenure as a concern too,
saying it voted for the deal in part because Dow had announced he
would step down this month. Earlier this year, Dow said Mr. Liveris
would stay on as CEO until next year as a way to see the deal
through and help with the formation of the materials business.
"The change in the committed timeline that was clear prior to
shareholder approval of the transaction is inappropriate and
creates the appearance of conflict between personal and communal
goals," Glenview wrote.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
June 27, 2017 19:08 ET (23:08 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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