The Morning Brief: Glenview Pressures Dow Chemical, DuPont

June 29, 2017   Stephen Taub

The hedge fund reportedly is urging the chemical giants to change their plan to break the newly merged company into three parts.

Glenview Capital Management has joined a small group of activists calling for Dow Chemical and DuPont to make changes to their merger deal. The Larry Robbins-led hedge fund, which rarely engages in activism, has met with top people at both chemical giants urging them to change their plan to break the newly merged company into three parts, according to the Wall Street Journal, citing a letter sent from Glenview to its investors. Glenview also reportedly expressed disappointment that Dow delayed the retirement of chief executive officer Andrew Liveris. Dow and DuPont agreed to merge in December 2015 in a deal valued at about $60 billion. It is expected to close in August.

We earlier reported that Dan Loeb’s Third Point has called on the two companies to create six companies after the deal is completed, claiming this would create an additional $20 billion in value. "Dow and DuPont have one chance to fully optimize shareholder value from the merger," Third Point said in its presentation. Back in 2015, Nelson Peltz’s Trian Fund Management lost its proxy fight with DuPont. At the end of the first quarter, Trian was the eleventh largest shareholder of DuPont. Dow was the second largest U.S. long of Third Point, which in turn was the chemical giant’s eighth largest shareholder. At the time, Dow was Glenview’s fourth largest U.S. long. According to the Wall Street Journal, Glenview told investors in its letter that it now owns $1 billion worth of Dow stock. That was roughly the value of Third Point’s stake.

___

Corvex Management’s
Keith Meister is turning up the pressure on Energen Corp., the oil and gas producer it had called on to put itself up for sale earlier in the month. In a new letter dated June 27, the activist hedge fund manager said he was "very disappointed" that the company announced on June 19 it will "continue with a status quo business plan." Meister noted the stock’s subsequent decline and said he was "troubled by the failure of the process by which the Board came to its decision." In the latest letter, Meister calls on the company to hold a road show with shareholders, independent of management, to get their views on the company’s future direction. "I encourage the board to embrace this opportunity to course correct and obtain the views of its shareholders in connection with deciding on the future direction of the company," Meister said. If the board fails to take such actions, he warned that he would "be resolute in pushing for a meaningful path for all stakeholders to have a direct voice in the plans for the company’s future."

___

Dyal Capital Partners has taken a passive, non-voting stake in Atalaya Capital Management, a credit and special opportunities alternative investment manager with more than $2.5 billion in assets under management. Dyal, a division of Neuberger Berman Group established in 2011, has 24 minority partnerships with hedge funds and private equity funds. "This capital allows us to continue developing our business for the future and invest more in our funds, fostering greater alignment with our investors," says Ivan Zinn, founder and managing partner of Atalaya, in a press release.

___

Shares of Valeant Pharmaceuticals International surged another 3 percent to close at $17.15.


Related Articles


Latest Poll

How will hedge funds finish 2017?

 - 76%
 - 11%
 - 13%

View previous results