Loeb, Dow Chemical Trade Shots Over CEO Liveris
13 Dezembro 2015 - 11:30PM
Dow Jones News
Long-simmering hostility between Dow Chemical Co. and Daniel
Loeb reached a boiling point over the weekend, with the shareholder
activist calling for the removal of Chief Executive Andrew Liveris
in the wake of the company's agreement to merge with DuPont Co.
On Saturday, a day after Dow unveiled the tie-up, Mr. Loeb sent
a private letter to the board raising questions about the deal's
timing. Mr. Loeb supports the merger, which would create an
agriculture and chemical giant currently valued at more than $120
billion before breaking it up into three parts. Mr. Liveris is to
be executive chairman of the combined company, while DuPont CEO
Edward Breen is to maintain that title at the new group.
Mr. Loeb's letter, reviewed by The Wall Street Journal,
questions whether the deal was rushed to be completed before a
so-called standstill agreement barring him from publicly speaking
about Dow expired this weekend.
According to people familiar with the matter, Mr. Loeb believes
unanswered questions about leadership, the board and the breakup
signal the deal was rushed. He believes a second deal Dow announced
Friday to take complete control of joint-venture Dow Corning raises
similar questions, the people said.
Dow hit back hard. Directors, including one appointed to the
board at the behest of Mr. Loeb, defended the deal and Mr. Liveris
in a series of interviews. They called the suggestion on timing
"ridiculous" and "difficult to imagine."
"Personally I think it's almost laughable to say that anyone
tried to engineer this date to the expiration of the standstill,"
said Raymond Milchovich, one of the two directors Mr. Loeb had
nominated a year ago. "There was never any rushing on the part of
management or the boards of either company to skip steps along the
way."
Mr. Loeb's feud stands in contrast with the involvement in the
merger of another activist, Nelson Peltz's Trian Fund Management
LP.
Trian itself was at odds with DuPont before the two sides in
recent weeks came together to help plan the deal. But the
significant role the activists have played in the recent history of
both companies is the latest sign of how consequential such
investors have become.
Mr. Loeb's Third Point LLC first built a roughly 2% stake in Dow
nearly two years ago, calling in January 2014 for a breakup of the
company. Dow, which had just announced a restructuring and asset
sales it considered significant, rejected his split proposal but
added urgency to plans to sell commodity-based and
chlorine-products businesses and buy back shares.
In November 2014, Mr. Loeb readied a proxy fight and launched a
website that included an attack video on Mr. Liveris's tenure.
The sides quickly settled the fight, with Mr. Loeb nominating
Mr. Milchovich and Robert S. "Steve" Miller to the board and Dow
putting up two of its own candidates.
Mr. Loeb was barred from publicly commenting on or attacking Dow
for a year, but privately has kept pressure on the board and Mr.
Liveris, according to people familiar with the matter. Mr. Loeb has
focused in particular on Mr. Liveris's personal spending,
questioning if shareholders are funding it. The company has
previously disclosed Mr. Liveris had to pay the company back more
than $719,000 after what it described as a routine audit committee
investigation.
Jeff Fettig, the lead independent director of the board,
reiterated Dow's earlier comments on the matter in an interview
Sunday, saying any questions about Mr. Liveris have been answered.
He and the other directors defended the company's results and the
DuPont deal.
"The board has been unanimous about the Dow's leadership team
including management making this transaction," Mr. Fettig said.
"Candidly, it would be difficult to imagine any other reason we
would conclude this deal other than we got our work done."
A third director, Ruth Shaw, said the board believed Mr. Liveris
was "essential" to the execution of the merger with DuPont. "Quite
frankly, I think the question is can we keep him?" she said.
All three directors said the deal was the best option for
shareholders.
Mr. Loeb privately threatened earlier this month to start a new
campaign once he was free to do so, the people familiar with the
matter said. He called the company's shareholder returns "woeful"
and called for a search committee to be formed to identify a new
chief executive, the people said.
The merger between DuPont and Dow and the subsequent breakup
plan appeared to address several of his concerns, including a
separation of Dow's businesses.
Mr. Liveris hinted publicly Friday that he was nearing
retirement and described the deal as a "culmination."
In a response to Mr. Loeb Sunday, the Dow board moved a step
further, saying Mr. Liveris has been clear that "he does not
contemplate serving" as CEO of the new material-sciences business
that will emerge from the breakup.
"He should not have any role in the post-merger entity," Mr.
Loeb wrote of Mr. Liveris. Giving him the executive chairman title
"is a slap and an insult to Dow shareholders," he wrote.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
December 13, 2015 20:15 ET (01:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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