Risk & Compliance

Dow Fires Two Execs amid Buyout Rumors

Company asserts that they were ''involved in unauthorized discussions with third parties about the potential acquisition of the company.''
Stephen Taub and Dave CookApril 12, 2007

Dow Chemical announced that it fired senior advisor Pedro Reinhard, a board member and former chief financial officer, and Romeo Kreinberg, an executive vice president, after determining that they were “involved in unauthorized discussions with third parties about the potential acquisition of the company.”

Dow acted swiftly: In a statement, the company elaborated that information about the misconduct was first disclosed to Dow on Tuesday, directors were informed on Wednesday, and the employees were terminated Thursday morning “with full support of the board.”

“The values of integrity and respect for people are at the very core of our company,” said chairman and chief executive officer Andrew Liveris, in a statement. “I think I speak for all employees when I say we are greatly saddened by the disrespect shown by our former colleagues. But we will move on to shape our future with an even greater resolve to execute our strategy and deliver value to our shareholders.”

The company did not provide further details about the potential deal. Britain’s Sunday Express reported in February that a bid for Dow was in the offing; earlier this week the tabloid reportedly wrote that a group of private equity firms and Middle Eastern investors were close to announcing a $50 billion buyout. Despite this and similar whispers, however, the company stated flatly on Monday that it has had “no discussion about a leveraged buyout.”

Even so, Dow’s share price has risen this year from about a low of about $39 per share in January to $46 at market close on Thursday.

Reinhard, who joined the company’s Brazilian operations in 1970 in the finance department, became CFO and was elected to the board in 1995; he remains a board member of Royal Bank of Canada, Sigma-Aldrich, and Colgate-Palmolive. He also remains on the board of Dow at least until a vote by shareholders, a company spokesman told the Associated Press.

Kreinberg joined Dow in 1977; his most recent title was executive vice president of performance plastics and chemicals. He also had executive oversight for the corporate marketing and sales organization. Kreinberg is a board member of the United States Council for International Business.

Reinhard and Kreinberg could not immediately be reached for comment. According to published accounts, however, both men are securing legal counsel, and Kreinberg has said that there is no truth to the accusations against him.