By Frank Esposito
SENIOR STAFF REPORTER
Published: January 21, 2014 5:39 pm ET
Updated: January 21, 2014 5:57 pm ET
Hedge fund Third Point LLC is calling for Dow Chemical Co. to consider spinning off its petrochemicals business – including its massive plastics operations.
New York-based Third Point — which owns an undisclosed stake in Midland, Mich.-based Dow — was severely critical of Dow's recent performance in a Jan. 21 letter to investors.
In the letter, Third Point officials said that Dow shares have generated a return of 46 percent in the past decade, compared to a return of 199 percent from the S&P 500 Chemicals Index and of 101 percent from the S&P 500.
"These results reflect a poor operational track record across multiple business segments, a history of under-delivering relative to management's guidance and expectations and the ill-timed acquisition of Rohm & Haas," Third Point officials said. "The company's weak performance is even more surprising given that the North American shale gas revolution has been a powerful tailwind for Dow's largest business exposure — petrochemicals."
In a statement released later on Jan. 21, Dow officials did not comment directly on the Third Point letter, but said that they "believe our investments have yielded sustainable value for our shareholders and will continue to in the near and long term."
"We constantly review our company at the management and board level to increase our shareholder value and competitiveness," they added. "We intend to continue an open dialogue to further enhance value for all our shareholders."
Third Point's comments seemed to have an immediate impact on Dow's per-share stock price, which closed at $45.92 on Jan. 21 — a one-day jump of almost 7 percent on a day when the broader Dow Jones Industrial Average was down 0.3 percent.
Dow's profit in the first nine months of 2013 doubled to $3.8 billion vs. the year-ago period, even as the firm's sales were flat at $42.7 billion. The firm employs 54,000 worldwide and ranks as one of the world's largest plastics and chemicals makers.
In early December, Dow announced plans to spin off or sell most of its chlorine value chain businesses, including epoxy and units that make PVC feedstocks. Those businesses have annual sales of about $5 billion. | 
