The Secret Behind the Independent Listing of New Dow Chemistry!

Shortly after his appointment as interim CEO of DuPont, Edward Breen received a call from Andrew Liveris, CEO of Dow Chemistry. The competitor apparently did more than just congratulate him. Brin also guessed Liweicheng's intentions. They agreed to have lunch in Philadelphia this Sunday. At a luncheon a few days later, Liweicheng and Brin discussed the plan to merge Dupont and Dow into one and then split them into three independent companies. Dupont and Dow, founded in 1802 and 1897 respectively, are frequent visitors to the Top 500 list. Both chemical giants had a market capitalization of about $60 billion, making it possible to merge equally.

Liweicheng hoped that Brin would seriously consider his proposal and hinted that there were other counterparties to choose from. A few days after the secret talks, Brin called Liweicheng back and agreed to broker the deal.

Dupont and Dow sparked the above process in October 2015, which is well documented in a report in the Wall Street Journal. Today, 42 months after, this century's trade is about to move towards another important node: the new Dow will be split from a consortium called Dow Dupont and listed independently. Morgan Stanley estimates that the new company's share price will be between $53 and $60, which means that the market value of the new Dow is expected to exceed $40 billion. On the same day, New Dow will replace Dow Dupont as one of the 30 components of the Dow Jones Industrial Average Index, which includes stocks of well-known American companies such as Apple and Coca-Cola. 

Radical investors focus on exploring undervalued enterprises in the market, and improve their interests as shareholders by actively participating in corporate management. The way they intervene in business operations is usually more radical, which is the main reason why they are called "radical investors".

In fact, DuPont did start to split up the business at that time. This part of the assets is named Komu and is famous for producing high-performance chemicals such as Teflon. But Peltz hopes DuPont will continue to work hard to split its materials, nutrition, health and agrochemical businesses into different sectors.

Colleen rejected the proposal. She believes that the current business structure will help companies gain more benefits in terms of size, channels and brands. In Colleen's view, Trian Foundation has focused too much on high-risk actions such as spin-offs.

In order to ease the dispute with radical investors, Dupont had proposed to offer Trian Fund a board seat, provided that Peltz himself could not be a candidate. According to his proposal, DuPont's board of directors would provide him with two seats, one of which he himself would occupy. At the same time, two seats on the board of directors of Cosmo, a special chemicals company, are required to belong to the Trian Fund.

The struggle reached its climax at the annual shareholders'meeting in May 2015. All 12 board members nominated by DuPont's management were approved, and Peltz failed to get the chance to nominate his favorite candidate.

In the meantime, the company lowered its annual performance expectations twice. Kohlen attributed the decline in DuPont's share price and performance to external market factors, but some investors lost patience with her and accused her of not being able to deliver on her proposed commitment to change the company.

In the year before Dupont fell into the bloody storm, its trading partner, Dow, also performed similar plots. But the difference is that Dow CEO Li Weicheng successfully settled the dispute.

This time it was the third Point of another hedge fund that played the leading role. Dan Loeb, the leader of the third point, suggested that Dow be divided into two parts and that special chemicals and petroleum refining plates be put into different companies to operate.

Dow's Board of Directors therefore joined four independent directors, two of whom were appointed by the Third Point Fund. At the end of 2014, Dow also announced a one-year truce with Point Three Fund, during which radical investors were not allowed to publicly criticize the company.

This agreement expires in November 2015. It was one month before the armistice expired that Dow and Dupont's leaders held the secret meeting. Since then, Liweicheng and Brin have met several times and drafted a framework agreement for the two companies to implement transactions. A few weeks after, Peltz of the Trian Foundation was invited to Baltimore to meet with members of DuPont's board of directors. During the meeting, Peltz said he would support Brin.