US chemical group Dow Chemical has fired two senior executives for supposedly participating in unauthorised discussions about a potential $50 billion (€37.2 billion) buyout of the company.
The Michigan-based group has sacked Romeo Kreinberg, head of Dow’s performance plastic operations and a 30-year company veteran, and Pedro Reinhard, a senior advisor and board member who served as the firm’s CFO until 2005, reportedly for talking to third parties about a possible buyout deal.
Dow chief executive Andrew Liveris has insisted that he has no interest in selling the company.
The boardroom upheaval is likely to re-open the debate about potential conflicts of interest when executives talk to private equity firms about a possible management buyout.
Kreinberg and Reinhard “engaged in business activity that was highly inappropriate and a clear violation of Dow’s code of business conduct”, the chemical giant said in a statement on Thursday.
A Dow Chemical spokesperson told Reuters: “These employees went to great lengths to hide this from us. We have no idea in terms of what their motivations were.”
Dow received information about “the misconduct” on Tuesday, informed its board on Wednesday, and fired the employees on Thursday. It gave no further details as to the alleged discussions and with whom they took place.
On Sunday, British tabloid The Sunday Express – citing unnamed sources – said a $50 billion (€37.2 billion) bid from a consortium of Middle Eastern investors and US buyout firms including Kohlberg Kravis Roberts was just days away from materialising. It said the investment group is being advised by JP Morgan Chase, while Goldman Sachs is advising Dow. Any deal at this price would the largest private equity deal on record.
On Monday, Dow denied the newspaper’s report, saying the company had no interest in pursuing a leveraged buyout.
The Sunday Express originally reported a potential buyout in February, saying the interested consortium included KKR, The Blackstone Group and the Carlyle Group.