Posted on 04/09/2007 5:51:34 AM PDT by truthingod
The rumor about the leveraged buy out bid for Dow Chemical is not a good thing for Michigan or our country. The idea that over half of the money being used to take over Dow Chemical is coming from the Middle East ought to be turning heads at many levels. Yet, I hear nothing from the governor of Michigan nor from Congress nor from the President. Why? For Michigan, it will be the loss of a major business player. The city of Midland in Michigan will be devastated by such a take over bid. This bid includes the break up of the company into smaller businesses. Yet, my concerns lies with the economics of such a take over and the issue of national security. Since when do Middle Eastern investors get to walk into America and take over the largest chemical company in the world without issue? The Dubai ports deal was seen as a threat to national security, but not this take over? Questions need to be asked quickly.
Only solution to Michigan’s sinking status is to make Puerto Rico a state. That way we won’t be last - for a while. :)
In most cases, questions aren't asked until it is too late...
Dow Chemical shares climb more than 10 pct in premarket on report of possible $50B buyout bid
Monday April 09, 2007
NEW YORK (AP) Shares of Dow Chemical Corp. rose more than 10 percent in premarket trading Monday after a British newspaper reported a group of Middle Eastern investors and U.S. buyout firms was preparing a bid for the huge chemicals and plastics maker.The Sunday Express, a British tabloid, reported over the weekend that the group has secured financing backing for a $50 billion bid for the Midland, Mich.-based chemicals company. That would be the biggest leveraged buyout ever.
The Express reported the investment team, which includes private equity firm Kohlberg Kravis Roberts & Co., is preparing a bid of $52 to $58 per share. At the low end, that would be a 17 percent premium over Dow Chemical's closing stock price of $44.47 on Thursday on the New York Stock Exchange. The market was closed on Good Friday.
Dow Chemical's stock jumped $4.58, or 10.3 percent, to $49.05 in premarket trading Monday.
The newspaper said a bid of between $52 to $58 a share could come this week, with half the financial backing coming from investors in Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman, and half from U.S. investors.
The newspaper didn't name any other investors other than KKR and did not cite sources.
A message seeking comment was left Monday morning for a Dow Chemical spokesman. A call to KKR went unanswered on Sunday.
A $50 billion takeover of Dow Chemical would be the biggest leveraged buyout to date. A $32 billion takeover of energy company TXU Corp. that was announced in February would be the largest such deal if it is completed. KKR and Texas Pacific Group are leading the bidding group for TXU.
Dow Chemical makes and sells chemicals, plastics and farm products to customers in a range of industries. In 2006, Dow Chemical reported it earned $3.72 billion on sales of $49.1 billion.
I guess when they have the $$$$ to do so.
“the largest chemical company in the world”-I believe is BASF-who is German.
I'm not sure it will be devestated, but certainly there will be an effect. Almost everything in the Midland economy is tied to DOW in some way (my wife is from Midland and her grandfather retired from DOW). Unless the new owners pulled up stakes and moved the company elsewhere, there is still a need for employees and all the other businesses who contract their services would still be needed, so I don't know if devestated would be correct.
It is highly likely that a new owner would move HQ to some other state..or even country.
May take a while, but it will happen. When your taxes rise and there isn’t a rise in benefits..more skilled workers, better roads etc..then you leave.
Koch Industries bought a large piece of DuPont just a few years ago. They could be s buyer for another piece of Dow, if KKR buys and splits it up...
It would be a shame. Midland was (once) a great place to be a kid.
You are correct. The number of jobs there has been steadily dwindling over the past 15 years. My grandparents lived across the road from the corporate center, and I remember the massive amounts of cars that used to come out after 5:00. Now it’s just a trickle. And that’s just the offices! It’s already a tough real estate market there - I had to sell my house for a huge loss after a year on the market. Looks like I got out easy compared to what will happen if this goes through.
This is what Dow’s CEO had to say about the “rumors”.
xxxxxxxxxxxxxxxx
Once again over the weekend, news media carried speculative reports from an unidentified source concerning a potential bid for Dow from an unnamed consortium of companies. The story was a follow-up to reports filed in the U.K.’s Financial Times and Sunday Express newspapers in January and February respectively, which were widely dismissed by U.S. chemical industry securities analysts as lacking any substance.
Dow continues to observe normal protocol in not commenting on rumors about the Company or its activities. However, Chairman and CEO, Andrew Liveris, expressed his disappointment at the continued speculation:
“A great deal has been said and written in recent weeks by third parties, highlighting just how impractical and nonsensical a take-over and break-up attempt would be,” he said. “Make no mistake, we have studied Dow’s structure many times and each time conclude that we will generate the most value for our shareholders by remaining an integrated and diversified chemical company. And that opinion is shared by many others - including the securities analysts who study our industry day in, day out.”
Analysts are strongly of the opinion that without management support, a buy-out of the Company would be virtually impossible. And they also concluded that even with management support, a break-up would make no sense, given our explicit comments about the considerable value we derive from being an integrated chemical company.
In a recent report by MergerMarket (a specialist news service for Mergers and Acquisition professionals), one chemical industry analyst explained: “Dow is very integrated so when you do the breakup you are going to lose efficiency, you’re going to bleed value ... it’s just going to be a real mess.” According to the report, a second analyst said the downstream and upstream assets of the company are too interrelated to allow for a meaningful break-up of the company, and that a great deal of value would be lost through the elimination of efficiencies.
At a recent investor conference in New York, Andrew spelled out the strengths that the company derives from its current structure, including: a balanced portfolio supplying products across an array of end-use markets ... clout in all the major chemical chains ... operational excellence ... the low-cost advantages of site and product integration ... global reach, which creates opportunities for both geographic growth and low-cost production ... and a depth of technological innovation that extends to both new and improved products and manufacturing processes.
“We have absolutely the right strategy,” said Andrew. “Going forward, you can expect more innovation, more market-facing businesses, more asset-light joint ventures, continued financial strength and flexibility, and a higher ratio of Performance businesses.”
“Given all that we have going on, I’ve no doubt we will continue to see media speculation about what we may and may not be doing.
“We can’t control what the media writes, but what we can control - and indeed, what we WILL control - is our steadfast commitment to executing this strategy with speed and with discipline and, by doing so, outpacing our peers across every metric of financial performance and redefining what it means to be a world-class chemical company,” he said.
I hope this is true, but remember who stands to gain a large sum of money through stock options held by such a person in such a position.
You very well could be correct. We have been through this before when the previous company I worked for was saying the same thing then we ended up working for Dow. One never knows until something happens or doesn’t happen. As diversified as the company is, it would seem strange however for them to want to do this but never underestimate the corporate world and the things they might do.
find out what technologies Dow is trying to develop in the area of alternative energies.
then you’ll know why so much Arab money is being pumped into taking them over. when the Arabs get Dow, that’s the end of any R&D into alternative energy they might be doing.
Sort of like when the Mexicans come here,huh, but then where do we go?
Also, I don't know how well it's acutally working, but even here in Nebraska I hear many radio ads from Michigan's Economic Development Program touting what the State is doing to try and attract businesses to relocate to Michigan. I have to think there would be some major efforts on the part of the State to make sure that Dow stayed put.
I'll be interested to hear what my wife's relatives who still live there think about all this.
On the other hand,Publications/Marketing and Test are holding their own, as are Technical Support and Finance.
But I see empty offices in the building...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.