Dow Chemical Company (“DOW”) has extended its common stockholders an offer to exchange their DOW shares for shares of a new company representing DOW’s chlorine business. To incentivize enough DOW shareholders to tender their shares, DOW is offering to give 10% more of the new company shares than the market value dollar equivalent. As a fictitious simple example, if DOW is trading at $10 per share, anyone tendering their shares would receive $11 worth of the new company stock.
Peloton has two recommendations for clients holding DOW stock:
- We recommend that clients hold their DOW stock and not tender their shares. While the 10% premium is a nice offer, we have identified several operating catalysts for DOW which we believe can drive the value higher than 10%.
- We have confirmed with the DOW investor relations office that to continue holding DOW shares, clients need not respond to the tender offer. Therefore, we recommend that Peloton clients disregard the DOW tender offer.
For more information, please refer to the prospectus detailing the offer by following this link.
Peloton Wealth Strategists owns the common stock of Dow Chemical Corporation. The opinions expressed above should be construed as neither investment advice nor a solicitation to buy or sell securities. Peloton Wealth Strategists assumes no liability for losses pursuant to investment actions entered into as a result of opinions expressed herein. Changes in economic and capital market conditions and the unique objectives of each investor should be considered before investing in securities.