Shares of Dow Chemical Co. rose almostfive per cent Monday after a British newspaper reported a group of Middle Eastern investors and U.S. buyout firms is preparing a bid for the huge chemicals and plastics maker.
The Sunday Express, a British tabloid, reported over the weekend that the group has secured financing for a $50 billion US bid for the Midland, Mich.-based chemicals company. That would be the biggest leveraged buyout ever.
The Express reported the investment team, which includes private equity firm Kohlberg Kravis Roberts & Co., is preparing a bid of $52 to $58 US per share. At the low end, that would be a 17 per cent premium over Dow Chemical's closing stock price of $44.47 US on Thursday on the New York Stock Exchange. The market was closed Good Friday.
Dow Chemical's stock jumped $2.16 to $46.63 US on the New York Stock Exchange after rising to a new 52-week high of $47.60 US earlier in the session.
The newspaper said a bid of between $52 to $58 US a share could come this week, with half the financial backing coming from investors in Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman, and half from U.S. investors.
The newspaper didn't name any investors other than KKR and did not cite sources.
A KKR spokeswoman declined to comment Monday. Messages seeking comment were left at Dow Chemical.
Deal would top TXU takeover
A $50 billion US takeover of Dow Chemical would top the$32 billion US takeover of energy company TXU Corp. that was announced in February. KKR and Texas Pacific Group are leading the bidding group for TXU.
Dow Chemical makes and sells chemicals, plastics and farm products to customers in a range of industries. In 2006, Dow Chemical reported it earned $3.72 billion US on sales of $49.1 billion US. The company has a global workforce of 42,000 employees.
The company's Canadian subsidiary, Calgary-based Dow Chemical Canada Inc., has annual sales of about $4.1 billion US and operates plants in Sarnia, Ont., Toronto, the Alberta communities of Fort Saskatchewan and Prentice, and Varennes, Que.
KKR was mentioned recently as a possible bidder for Canadian telecommunications giant BCE Inc. BCE denied it was talking to KKR.