Dow Chemical CEO admires IBM’s M&A model

By Ernest Scheyder

MIDLAND, Michigan (BestGrowthStock) – For Andrew Liveris, the future of Dow Chemical (DOW.N: ) may involve smaller acquisitions akin to a strategy employed by tech titan IBM (IBM.N: ).

The chief executive of the largest U.S. chemical maker said he is through with mega-buyouts and wants to focus on bite-sized deals aimed at growing globally.

“I love the IBM model,” Liveris told Reuters. “They got to a certain size and from that moment on, they did bolt-on technology M&A, which they scaled up around the world.”

Since gulping down rival Rohm & Haas for more than $15 billion in 2009, Dow has been trying to slash debt, sell stray assets and increase its earnings — all while surviving the recession.

However, the 13.5 percent rise in its share price so far this year lags the 41 percent gain registered by rival DuPont (DD.N: ).

In short, Dow has its hands full.

“I don’t think the next 10 years of Dow will need a big-bang deal,” he said. “I’m not saying you wouldn’t do a half billion or a billion-dollar deal. But there’s no need for the Rohm & Haas type of deal.”

Joint ventures, however, are on the radar, although Dow turned down at least one proposal earlier this year for a joint venture involving its highly lucrative plastics business.

“We resisted exiting at a low multiple,” Liveris said.

In 2008, Dow’s plastics businesses were set to be spun off into a joint venture with a Kuwaiti state-owned company before the Kuwait government scuttled the deal.

That failed deal is set to go before an arbitrator next year in London, and Dow expects a ruling around July 2011.

But that has not stopped the company from considering other deals, Liveris said.

“We are actively working on several possibilities,” he said. “We remain bullish on plastics.”

On Monday, Dow said it expects annual earnings of $3.50 to $5.50 per share in the “near term” [ID:nN01176333]. Last year, Dow earned 63 cents a share, and analysts on average expect earnings of $1.81 a share this year, according to Thomson Reuters I/B/E/S.

Liveris said he is confident the Rohm buyout is paying off.

“We are on a path of progress,” Liveris said. “Make no mistake about it, we will not veer from that path.”


Despite his breakneck schedule — he travels much of the year for Dow and sits on the Citigroup (C.N: ) board — Liveris said he is never far from home.

Married to his wife, Paula, for more than 20 years, he has three children, all of whom were born during various Dow assignments around the world, including in Hong Kong and Bangkok.

Liveris, 56, is a native of Australia of Greek heritage and does not hold U.S. citizenship.

Asked what he did for the Halloween holiday, Liveris pulled out his phone — Research in Motion’s (RIM.TO: ) BlackBerry Torch — and showed off his creations.

“I carved Halloween pumpkins: a dog, cat, a Cyclops, an American flag and a cross,” he said. “I am very invested in my family — it’s all my discretionary time.”

This past weekend Liveris was designated an archon in the Greek Orthodox Order of St. Andrew the Apostle, an honor given for “outstanding service to the church,” according to the order’s website.

“It’s the oldest honor in Christendom, first done in 48 AD by St. Peter,” Liveris said. “It was one of the most emotional times of my life.”

(Reporting by Ernest Scheyder; Editing by Maureen Bavdek)

Dow Chemical CEO admires IBM’s M&A model