A Dow Chemical executive who was fired after being accused of engaging in unauthorized discussions with third parties about selling the company told CNBC's David Faber that "it never happened."
Romeo Kreinberg, head of Dow's performance plastics operations and a 30-year company veteran, said accusations that he violated the company's code of conduct are "totally untrue."
Kreinberg said he did nothing wrong and refuses to resign. He added that the board did not present him with any evidence that indicated he had spoken to any third parties. He said he hoped whatever evidence the board has will stand up in court, Faber reported.
Kreinberg's termination will not be official unless he tenders his resignation to the board or is voted off the board, a Dow spokesman said.
Dow Chemical , the largest U.S. chemical company, fired Kreinberg and board member Pedro Reinhard earlier on Thursday, accusing them of engaging in unauthorized talks about a potential buyout of the company.
Reinhard could not be reached for comment.
Dow gave no details on the alleged sale discussions and did not name any other participants.
"These employees went to great lengths to hide this from us," said Dow spokesman Chris Huntley. "We have no idea in terms of what their motivations were."
Midland, Mich.-based Dow has recently been the subject of leveraged buyout rumors and has been linked with a number of deals since earlier this year.
Reinhard was Dow's chief financial officer before stepping down from that post in late 2005. He is on the boards of Colgate-Palmolive and the Royal Bank of Canada.
An analyst who followed the company while Reinhard was CFO said Dow's allegations didn't surprise him.
"Pedro has always wanted to run a company. Pedro was in the running at one point to take over the company," the analyst said.
Dow said it received information on April 10 about the alleged actions of Reinhard and Kreinberg, from a source it would not identify.
The board was informed on April 11 and the employees were terminated with full support of the board on Thursday. Dow did not immediately comment on its plans to fill the vacancies left by the firings.
"We will move on to shape our future with an even greater resolve to execute our strategy and deliver value to our shareholders." Chief Executive Andrew Liveris said.
Last Sunday, a British newspaper reported that a consortium was preparing a $50 billion bid for Dow. On Monday, the company said it had had no discussions about a leveraged buyout.
The firings highlight a hot topic among M&A lawyers and bankers, which centers on the question of when a corporate executive should inform the board or superiors about conversations with a potential buyer.
That topic has heated up lately, as the presence of private equity buyers has surged in the last two years, with few companies immune from their interest. Private equity deal volume has jumped to more than 20% of global M&A, up from the single digits only a few years ago.
Hassan Ahmed, an analyst with HSBC, said Dow's action against the two officials indicates that the company was in play and could continue to be a buyout target.
"What it tells us is that already there was a board member who was in favor of private equity, so I would like to believe that maybe there are others who are thinking along the same lines." said Ahmed.
Whether the company receives a bid or announces a share buyback, it would only help boost the company's share price, he added.