Dow Chemical shares surge on speculation: Private-equity bid could be worth $54 billion, U.K. tabloid reports

Steve Goldstein & Laura Mandaro, MarketWatch, February 26, 2007
SAN FRANCISCO (MarketWatch) — Dow Chemical Co. shares Monday made their biggest one-day move in more than four years as investors reacted to a story in a British tabloid that the company could be the latest and largest firm to field a leveraged buyout offer.
In the next few weeks, Dow will get a takeover bid worth up to $54 billion from a consortium of private-equity firms, the Sunday Express reported over the weekend.
The report sent Dow shares surging by as much as 8.7%, the biggest one- day move since October 2002, to a new 52-week high of $47.26. They closed up 3.5% to $44.99 on volume of more than 37 million shares.
Investors were keenly focused Monday on mergers and acquisitions following news over the weekend that a private investment group led by Kohlberg Kravis Roberts is paying $45 billion to buy TXU Corp., the biggest power utility in Texas, in what would rank as the biggest leveraged buyout in U.S. history. See related story.
However, the Dow story is from a publication not well-known for its mergers-and-acquisition coverage — the tabloid Sunday Express, which also offered its readers a compact disc from the Culture Club. The newspaper didn’t identify the source of its information.
It said the buyout team is “likely” to be composed of Kohlberg Kravis Roberts, Blackstone Group and Carlyle Group. They intend to break up Dow Chemical into smaller companies, the report said.
An offer is expected to come in at $60 a share, against Friday’s close of $43.45, the report added. Unnamed “speculators” believe the breakup value could be up to $80 a share, the paper reported.
Dow Chemical, the top U.S. chemicals maker, is a component of the S&P 500.
Chris Huntley, a spokesman for the Midland, Mich.-based company, would not comment Monday. But analysts said the company’s management is likely to oppose any attempt at a breakup. See full story.
Steve Goldstein is MarketWatch’s London bureau chief.
Laura Mandaro is a reporter for MarketWatch in San Francisco.

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