Third Point takes significant shareholding in Dow Chemical
Tuesday 21 January 2014
Third Point, the hedge fund run by activist investor Daniel Loeb, has taken a significant shareholding in Dow Chemical and is urging the company to explore a spin off of its petrochemical business so it can concentrate on being a specialty chemicals firm.
Third Point revealed in a letter to investors dated January 21 that Dow is its biggest current investment. The hedge fund argued shareholders might be better served by the spin off and also urged Dow to consider a “meaningful” share buyback.
“Dow shares have woefully underperformed over the last decade, generating a return of 46% (including dividends) compared to a 199 per cent return for the S&P 500 Chemicals Index and a 101 per cent return for the S&P 500,” said the letter to Third Point investors.
“We believe that Dow would best serve shareholders' interests by engaging outside advisors to conduct a formal assessment of whether the current petrochemical operational strategy maximizes profits and if these businesses align with Dow's goal of transforming into a 'specialty' chemicals company.
“The review should explicitly explore whether separating Dow's petrochemical businesses via a spin-off would drive greater stakeholder value.”
Dow Chemical shares rose more than 6 per cent to $45.93. Dow is the second-biggest US chemicals company with a stock market value of roughly $55 billion. Analysts estimated that Third Point's stake in Dow is bigger than its $600 million-plus stake in Yahoo, and more than 1 per cent of Dow's stock.
In a statement, Dow Chemical responded: “We believe our investments have yielded sustainable value for our shareholders and will continue to in the near and long term.
“We constantly review our company at the management and board level to increase our shareholder value and competitiveness. We intend to continue an open dialogue to further enhance value for all of our shareholders.”
Loeb also revealed in the letter that Third Point has taken a stake in T-Mobile, seen as a potential merger partner with Sprint, and in Ally Financial, a former auto financing division of the General Motors group that is undergoing a restructuring.
Apple agrees deal with Visa on contactless payments
- 1 Is Apple's iCloud safe after leak of Jennifer Lawrence and other celebrities' nude photos?
- 2 Joan Rivers: 'Palestinians deserve to be dead'
- 3 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photo leak: 'These are completely fake'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
London 'terror threat': Metropolitan police deny tube attack hoax
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...
£650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...
£350 - £375 per day: Harrington Starr: Looking for a Java/C++ Developer to wor...