Dow Chemical needs Warren Buffett
Dow Chemical CEO Andrew Liveris has to make a decision by next week, since the regulatory approvals for the Rohm & Haas deal are expected to come through this week. And he can not fail this time because his reputation and Dow's strategy of moving into the higher-margin specialty chemicals business, all rides on completing the Rohm deal.
However, It is not easy. As of Thursday, Dow's market value was $14 billion, at least $1 billion less than the price it is paying for Rohm. Besides, Liveris have to find another $7.5 billion to replace funds that had been promised by a joint venturer Kuwait. Liveris could cut Dow's $1.5 billion di
vidend, but I do not think this is a option and it doesn't help that much. Another option is turn to Buffett.
In fact, Warren Buffett's Berkshire Hathaway has invest $3 billion to Dow's convertible preferred securites in early July when Liveris announced the deal with Rohm. From that time, Buffett's shares price has dropped from $41.32 to $15.89. If liveris can persuade Mr. Buffett Dow's prosperous future, maybe Buffett could put more investment to Dow's to earn a better return if Dow's shares bounce back.
But time flies, now the market is full of good companies with attractive prices, Will Mr. Buffett save Dow's? We'll see.
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