NEW YORK (AP) — Hedge fund Third Point LLC said Tuesday that it has acquired a significant stake in Dow Chemical and wants the company to spin off its petrochemicals division.
Dow Chemical Co. shares jumped $2.25, or 5.2 percent, to $45.32 in morning trading after rising as high as $46.70 earlier. The stock has been trading around six-year highs.
Third Point says Dow is now its biggest investment but didn't specify how many shares it had acquired other than to say it was a significant position. CNBC reported that Third Point paid $1.3 billion for the stake.
The hedge fund said Dow stock has performed poorly compared to other chemical stocks and the S&P 500 and said a spinoff of the petrochemicals business would deliver more value for shareholders. The fund took a more positive view of Dow's agricultural science and electronics and functional materials businesses, as well as Dow Corning, a joint venture with Corning Inc. that makes silicone-based adhesives, sealants and other products.
Dow Chemical spokeswoman Rebecca Brantley said the company is aware of Third Point's position. Brantley said Dow welcomes constructive input and wants to continue a dialogue with shareholders, and that the company constantly reviews its strategy. She said Dow's investments have yielded value for shareholders and will continue to do so.