CEO of Third Point--hedge fund firm and holder of Dow Chemical equity--unsure whether Dow Chemical should be split up or kept together, citing company's 'lack of transparency'

NEW YORK , February 13, 2014 () – Dow Chemical Co's "lack of transparency" makes it difficult to determine whether the petrochemical giant should be split up or kept together, hedge fund titan Daniel Loeb said on Wednesday.

The harsh words escalate the tension between the largest U.S. chemical maker and Loeb, operator of the $14 billion Third Point hedge fund.

Loeb, who last month said Dow Chemical had become the largest equity investment held by Third Point and urged the company to spin off its lucrative but slow-growing petrochemical unit and focus on specialty materials, issued the remarks a day after Dow Chemical said an internal review found breaking up the company would not help shareholders.

Loeb's foray against Dow Chemical marks the third time in less than a year that he has demanded changes at a major global company, including asking Sony to separate its entertainment division and demanding that Sotheby's find a new chief executive officer.

Dow Chemical's CEO, Andrew Liveris, dismissed the breakup idea almost as soon as Loeb announced the idea to investors while at last month's World Economic Forum in Davos, Switzerland. Both Liveris and Loeb attended the forum, though they reportedly did not meet.

The Midland, Michigan-based company, in a filing with the U.S. Securities and Exchange Commission on Tuesday night, disclosed the findings of the internal review.

The company said that a breakup could actually hurt shareholders by hindering its ability to buy supplies in bulk and share scientific research.

Dow Chemical's attempt to remake itself as a "vertically integrated science company" remains "the right strategy to maximize value for all of our shareholders in the short and long term," executives said in the filing.

Third Point on Wednesday took umbrage, saying in a statement to Reuters in response to questions about the filing that Dow Chemical's "lack of transparency" makes it difficult to determine how its decision was reached.

The hedge fund said it was prepared to sign a non-disclosure agreement with Dow Chemical in order to review the company's records and arrive at its own conclusion.

"Transparency is essential considering Dow's undistinguished track record of capital allocation decisions," Third Point said.

Dow Chemical declined to comment, saying that it had nothing to add beyond its regulatory filing.

Loeb has not disclosed the size of his stake in Dow Chemical. Loeb had said in a letter to investors, which was seen by Reuters, that Dow Chemical is now his largest investment. That indicates the investment exceeds $1 billion, the amount he paid for a stake in Japan's SoftBank Corp, announced last November.

Shares of Dow Chemical fell 1 percent to close Wednesday at $46.37.

Loeb's Third Point ranked as one of the hedge fund industry's best performers last year. But Loeb started this year on a down note with his fund off 1.8 percent.

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