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Dow Chemical's toxic takeover fight. Also: Boston Scientific CFO Larry Best retires after 15 years with the firm.
Laura DeMars, CFO Magazine
June 1, 2007
Recent events at Dow Chemical Co. can best be described as toxic. For the past two months, the company and its former longtime CFO, J. Pedro Reinhard, have been embroiled in a fight started by accusations that Reinhard was involved in a "secret takeover" plot against the company. Not surprisingly, it looks like the saga will have to be resolved in court.
In April, Dow CEO Andrew Liveris fired Reinhard from his positions as senior adviser and board member because he and another executive, Romeo Kreinberg, allegedly had been talking with outside entities about buying the company. According to court filings, Liveris found out from the CEO of a bank that the two were conducting discussions in "multiple meetings in multiple months in multiple locations," and "with a number of different parties," including one investment bank.
In response, Reinhard, who denies any wrongdoing, filed suit against Dow and Liveris for libel and breach of contract. Dow has also filed suit against Reinhard — its CFO from 1995 to 2005 — and Kreinberg seeking to reclaim unspecified damages for breach of fiduciary responsibility and equity awards. In its filings, Dow said it was "enveloped by a swirl of extraordinarily disruptive published rumors" that a takeover was looming and "was forced to embark on a distracting and frustrating search to determine the validity and source of the rumors."
Despite all that mudslinging, says Attila Bodi, a partner with McDermott Will & Emery, it remains to be seen how much genuine damage has resulted. Even if Reinhard were involved in talks using nonpublic information, he most likely won't face any extreme penalties, says Bodi, noting that Reinhard didn't actually put together a bid. "Dow would have to show how Reinhard and Kreinberg benefited personally from the rumors."
Deal Me Out
For weeks, the business pages followed the seesaw bidding war between Boston Scientific Corp. and Johnson & Johnson over then-struggling medical-device maker Guidant Corp. Just when the matter seemed sealed with Johnson & Johnson, Boston Scientific CFO Larry Best came back with a bid of $27 billion, winning the deal in January 2006.
Now, after 15 years and 37 acquisitions, Best is calling it quits as CFO of Boston Scientific. The 55-year-old, who is often referred to as the company's "hard-driving deal maker," will retire in July to pursue private investing in the life-sciences field.
On the basis of those acquisitions, Best has helped the Natick, Mass.-based company grow from a small maker of catheters to one of the world's most well-known heart-device manufacturers, with $24 billion in market value. The Guidant deal, however, hasn't been without controversy. Initially, many analysts complained that the deal was overpriced; the company now has $8.9 billion in long-term debt on the books. Since the acquisition, safety concerns have been raised about Guidant's drug-coated coronary stents, and its defibrillators have been recalled.
Nevertheless, Jeffrey Barnes, a general partner at Oxford Bioscience Partners, doesn't think the problems with Guidant were a major factor in Best's exit. "He's been there for 15 years. That's a pretty good run for any CFO," Barnes says. Boston Scientific has named Sam Leno, the former CFO of Zimmer Holdings, as Best's successor. — L.D.