Loeb in his quarterly investor letter said Dow is Third Point's largest current investment, but said the company's shares have "woefully underperformed over the last decade" generating a return of 46% including dividends compared to a 199% return for the S&P 500 Chemicals index. The investor did not disclose the size of his stake, but he reportedly spent $1.3 billion amassing Dow shares.
Loeb called on the company to seek options for its petrochemical units.
"We believe that Dow would best serve shareholders' interests by engaging outside advisors to conduct a formal assessment of whether the current petrochemical operational strategy maximizes profits and if these businesses align with Dow's goal of transforming into a 'specialty' chemicals company," Loeb wrote. "The review should explicitly explore whether separating Dow's petrochemical businesses via a spin-off would drive greater stakeholder value."
In an e-mail statement, a Dow press official said the company "routinely monitors and engages with all of its shareholders, so we are very aware of our owners' positions." The official added: "We engage with all of our owners to understand their views and we welcome all constructive input with a common goal of enhancing long-term value."
Midland, Mich.-based Dow has been actively seeking to revamp its businesses. The company in 2008 kicked off a transformation aimed at shedding lower-margin units and focusing on higher-priced specialty materials by acquiring Rohm and Haas for $18.8 billion.