Among the items urged to be considered:
- Dow should temporarily reduce its dividend to $0.01/share (or permanently, JP doesn't really care, he just wants his M&A arb fund not to show red ink for the first time ever)
- Sell $4 billion in new common equity (guaranteed to fetch a premium valuation)
- Issue bonds to reduce the bank financing portion of the deal (leverage is good. very good)
- All of the three (again, see red ink comment)
Paulson ends the letter with this ominous warning:
We suggest that Dow can follow the same strategy as InBev and close and refinance the Rohm & Haas acquisition. As we previously indicated, depending on the terms we would have a high interest in participating in any equity or hybrid security offerings. We also suggest that the Board act quickly in closing the transaction as you risk further damage to your shareholders by unnecessarily delaying the closing.
Amusingly Dow's shareholders would obviously be further damaged if Dow's board were to follow Paulson's advice to close the ROH deal at a stupid valuation. However, our advice to Liveris: don't piss off Paulson... our money would not be on Dow. Sphere: Related Content Print this post