Dow Chemical Rejects Loeb Call To Split Company Following Strategic Review

(RTTNews) - Dow Chemical Co. (DOW) revealed in a regulatory filing on Tuesday that its board and executive management team has rejected activist investor Dan Loeb's call to split the company. The decision was taken in conjunction with external advisers after a previous and recently conducted evaluation as part of a broad and thorough review of the company's strategic options.

This was revealed in an addendum filed to the company's fourth quarter and full-year 2013 earnings teleconference materials with the U.S. Securities and Exchange Commission.

Loeb's hedge fund Third Point LLC had on January 21 called for a spinoff of Dow's petrochemicals business and a share buyback to improve profitability after it revealed a large $1.3 billion stake in the chemical company.

The strategic review found that splitting the company to create separate petrochemical and specialty-chemical businesses provided no productivity or capital allocation improvements, but rather negatively impacted Dow's value proposition which leverages scale, integration costs and technology benefits across multiple science-based, vertically integrated value chains.

The strategic review also outlined a series of actions to maximize Dow's value, which the company has been implementing. The company's priorities include the execution of non-strategic business divestitures.

Dow Chemical said in October that it expected to raise between $3 billion and $4 billion from asset sales in the next 18 to 24 months.

In December, the company said it planned to separate a major part of its chlorine value chain in a bid to streamline its operations and move away from cyclical commodity products. The assets being separated contribute $5 billion in annual revenue, inclusive of sales on the merchant market and sales to support Dow's downstream, value-added products.

Dow believes that the specific actions it has taken to transition Dow from a commodity-based model into a vertically integrated science company focused on specialty materials, agriculture, and specialty plastics, is the right strategy to maximize value for all of our shareholders in the short and long term.

DOW closed Tuesday's regular trading session at $46.84, up $1.00 or 2.18% on a volume of 13.49 million shares.