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Dow Chemical Shares Up 6% As Buyout Speculation Continues

Shares of Dow Chemical rose 6% Thursday on renewed speculation that the plastics and chemicals giant may be the target of a leveraged buyout, analysts said.

Late last month the British newspaper Sunday Express reported that buyout funds might make a takeover offer worth $54 billion.

The speculation was revived on Thursday when the Economic Times in India reported that India's top petrochemicals maker, Reliance Industries, was set to form a joint venture with Dow.

"I think both scenarios are likely," Hassan Ahmed, a chemicals analyst with HSBC in New York, said of the buyout and joint venture possibilities.

"Dow won't just sit there. It will be either a JV or a buyout. Even if neither of these happens, it puts pressure on Dow management to do something," he said.

He said Dow shareholders have expressed impatience with the company, which "is sitting on a lot of cash and doing nothing."

The Indian newspaper report, citing unnamed sources, said talks between Reliance and Dow were at an advanced stage and the companies were expected to make a formal announcement by the weekend.

A Reliance spokesman denied a deal was in the offing, the newspaper said, while a Dow spokesman said it was not the company's policy to comment on rumors about itself or its activities.

In morning trade on the New York Stock Exchange, Dow shares were up $2.63 at $46.01.