Dan Loeb to Call for Changes to Dow-DuPont Post-Merger Plan--Update

By David Benoit Features Dow Jones Newswires

Tensions between activist investor Dan Loeb and Dow Chemical Co. are spilling back into the open.

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After a year of peace, Mr. Loeb plans to publicly push for changes to the complicated combination and breakup of Dow Chemical and DuPont Co., according to a presentation reviewed by The Wall Street Journal.

The two chemical giants announced their megadeal in late 2015, saying they would briefly combine their sprawling business before splitting the merged operation into three public companies: agriculture, materials and specialty products.

But earlier this month Dow and DuPont announced they were reviewing that plan following shareholder pressure to alter the makeup of the three new companies.

Mr. Loeb's presentation essentially says the current plan to split up the businesses doesn't go far enough to break apart Dow, echoing other investors and analysts. He first took a stake in Dow in 2014 and pressed for it to break up.

In a statement, the companies said they "are fully aligned regarding the objective of the review, and we continually solicit and welcome input from our owners."

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Mr. Loeb's Third Point LLC is pushing the companies to shift businesses between the planned materials company, known as Dow 2.0, and the specialty chemicals company, according to the presentation. The hedge fund wants the specialty company to be formed by four units that themselves could be separated or sold off, the presentation says.

Third Point's plan would shift businesses that generate $3.7 billion in earnings before interest, taxes, depreciation and amortization to the specialty business, while a smaller set of businesses with some $300 million in Ebitda would move from specialty to materials.

The presentation estimates Mr. Loeb's plan would create some $20 billion and lead to additional cost cuts.

Mr. Loeb's decision to go public after the companies announced they were reviewing the postmerger plan signals he remains concerned about Dow's decision making.

After the merger was struck in 2015, Mr. Loeb publicly called for Dow Chief Executive Andrew Liveris to step down. The two sides brokered a compromise that Mr. Liveris would step down this year after the deal closed. With the deal delayed by regulatory matters, Dow announced this month Mr. Liveris would stay through April 1 of next year.

Mr. Loeb's relationship with Mr. Liveris has improved in the past year, people familiar with both sides have said.

Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

May 24, 2017 11:52 ET (15:52 GMT)