An activist investor claims spin-offs following the merger with DuPont companies could leave $20 billion in shareholder value on the table.
Dan Loeb, through his ThirdPoint hedge fund, issued a report that demands a thorough review of post-merger plans to split Dow-DuPont into three publicly traded entities that include materials, specialty products and agriculture. The ag business was the main driver of the merger.
It was previously announced that Delaware will be the headquarters for the agricultural and specialty businesses.
The report goes on to advise that the board of the merged company to determine if more cost cutting is needed, or whether additional businesses should be sold or spun off from Dow-DuPont.
The report took note of spin-offs with stocks that have performed better than their former parents. Two examples cited were Chemours, which was spun off from DuPont and Axalta, the former DuPont automotive finishes business that is now a publicly traded company.
Loeb is a long-time critic of Dow CEO Andrew Liveris and pressed for his retirement after the completion of the merger with DuPont. He had earlier press for a break-up of Dow as a way to enhance shareholder value.
Loeb’s actions are similar to those of activist investor Nelson Peltz, who bought a chunk of DuPont stock and waged a proxy fight for board control.
In response to the threat, then CEO Ellen Kullman bought Tyco CEO Edward Breen on board as a director.
While Kullman prevailed, Kullman was reportedly shown the door by the board, which appointed Breen, who, in turn, helped engineer the Dow-DuPont merger.
Peltz has been silent on the merger. Shares of both companies have soared, aided, in part, by stronger earnings and optimism about themerger.
