GO
Loading...

CNBC's Faber: Dow Chemical Buyout by Private Equity is Doubtful

Dow Chemical said after U.S. markets closed Monday that it has had no discussion of a leveraged buyout.

It said its board of directors fully supports its management team and the company's current strategy.

Earlier Monday, CNBC's David Faber reported that people aware of private equity interests say Dow Chemical has told them "not to bother" approaching the company.

The company statement follows a report by a British newspaper that a consortium of investors and U.S. buyout firms were preparing a bid for Dow.

Dow's shares surged on the New York Stock Exchange on Monday, after a U.K. tabloid paper reported Sunday that a consortium of Middle Eastern investors and American buyout firms is preparing a $50 billion approach for Dow Chemical in what could be the world's biggest ever leveraged buyout.

Quoting sources close to the deal, The Sunday Express said a financing package has been put in place for a break-up bid of between $52 to $58 a share and an approach valuing the company at least $50 billion could come by the end of this week.

At least half of the capital is being provided by investors from Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman, with the rest contributed by a number of U.S. buyout firms including Kohlberg Kravis Roberts, it said.

Representatives of Dow Chemical and Kohlberg Kravis Roberts were not immediately available for comment.

The story follows reports in recent months that strategic changes were afoot at Dow, which has been moving toward a focus on specialty chemicals.

In March, the Wall Street Journal said Dow was in talks with India's Reliance Industries about a potential joint venture, citing people familiar with the matter.

Analysts had said they were unsurprised at the report and expected Dow to split off its basic chemicals and plastics business as part of what it has called its "asset light" strategy, which would give it a more nimble and higher-margin profile focusing on specialty chemicals.

In late February, the Sunday Express reported that Dow could get a takeover offer of as much as $54 billion from buyout funds, without naming any sources.

The paper had said the approach was likely to come from a combination of global investors and American private equity giants, who intended to break up the group into smaller companies through a highly leveraged buyout.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video