Dan Loeb's Third Point Made $141 Million on Dow-DuPont Reportsby
Activist investor sees value of Dow stake surge 12% Tuesday
Merger may lead to a Dow breakup, which Loeb has advocated
Third Point, the hedge fund founded by activist investor Dan Loeb, is about $141 million better off after the value of its Dow Chemical Co. stake jumped on reports that the company is in late-stage talks to merge with DuPont Co.
Third Point’s 23.5 million Dow shares had a market value of $1.34 billion at the close of trading on Wednesday. Dow shares soared 12 percent after news of the potential merger, which would be the largest in the chemical industry. Should the deal proceed, the merged Dow-DuPont would subsequently be broken into three separate businesses -- agriculture, commodity chemicals, and specialty chemicals -- people familiar with the situation said Tuesday.
An eventual breakup of Dow would fulfill Loeb’s proposal last year that the Midland, Michigan-based company would realize a greater value for shareholders by separating its commodity chemicals activities, whose earnings are more cyclical, from the higher-margin specialty chemicals business. In November 2014, Dow agreed to give Third Point two nominees on its board. The hedge fund also agreed to a standstill provision barring any disparagement of Dow for a year.
Third Point is the seventh-largest Dow shareholder, with a 2 percent stake, according to data compiled by Bloomberg. From Jan. 17, 2014, the last trading day before Loeb’s interest in Dow was first reported, through Wednesday’s close, the stock gained 32 percent.