A every detailed and commendable article. What amazes me is the speed at which the article has come out with so many details. The events happened just two months ago. The dust is settled and the event has been archived. Read on.
The extraordinary story of two Dow Chemical officials who plotted an LBO of their company - and forgot to tell the CEO or board.
(Fortune Magazine) -- On Jan. 18, 2007, the Financial Times reported "talk in the market" that "a consortium of private equity groups are working on a breakup bid" for Dow Chemical. Dow's share price was spiking; its shareholders, employees, and joint venture partners were demanding more information; yet its CEO, Andrew Liveris, was totally in the dark about what, if anything, lay behind the rumor.
The next morning he e-mailed Dow director and former chief financial officer J. Pedro Reinhard, whom he knew to be plugged in to the financial community. "Can you sniff around your contacts?" he asked. "Let me know if this has any basis?"
About two hours later Reinhard replied dismissively, "This rumor was in the market for about over six months."
"Anything new?" pressed Liveris.
"Not that I am aware," Reinhard responded.
Reinhard was not being candid with his CEO. A few hours before tapping out his responses, he had been meeting in London's plush Carlton Tower Hotel with two advisors working for an Omani sovereign wealth fund. The fund was trying to form a consortium with U.S. private equity firms to launch a leveraged buyout of Dow. According to later statements by the advisors, Reinhard and one of Dow's highest-ranking executives, Romeo Kreinberg - then responsible for about half of Dow's global operations - had been in a hotel room flipping through a 100-page booklet prepared by a London affiliate of J.P. Morgan Chase outlining how the Omani-led LBO would proceed. They were also discussing the compensation Reinhard and Kreinberg might expect if the deal went through as planned - Reinhard would be chairman of the new entity and Kreinberg chief executive.On April 12, 2007, Dow (DOW, Fortune 500) fired the two executives, two days after learning from J.P. Morgan CEO Jamie Dimon that his bank had been advising the Omanis on the bid and that Dow's Reinhard and Kreinberg had participated in the discussions. Dow invoked punitive clauses in their contracts, cutting off roughly $45 million in vested equity and other compensation. Reinhard and Kreinberg responded with outraged protestations of innocence and filed defamation suits against Dow for $25 million and $100 million, respectively.
The bitter litigation came to a morally unsatisfying conclusion last month. On the one hand, Reinhard and Kreinberg admitted that, well, yes, they had in fact participated in unauthorized LBO discussions, and yes, Dow's board had been fully within its rights in imposing the draconian penalties on them. At the same time, however, Dow made major financial concessions. Though the settlement terms are confidential, it's clear that the former officers will have restored to them much of the lucre that Dow tried to yank. In other words, the bogus defamation suits had just been a cynical negotiating tool, and in the end, a shrewd one.
Still, the lawsuits will have one lasting adverse consequence for the plaintiffs: articles like this one. During the course of the litigation, thousands of e-mails and other documents surfaced, as did several key deposition transcripts. From them it is possible to piece together much of what happened, and what emerges is that Kreinberg and Reinhard - the latter still a director in good standing at Colgate-Palmolive (CL, Fortune 500), Royal Bank of Canada, and Sigma-Aldrich - were actually engaging in conduct that was even worse than Dow realized when it fired them.
Kreinberg and Reinhard declined through their attorneys to be interviewed for this story. From the day they were fired, each adopted a maddeningly peekaboo stance, in which their attorneys asserted that their accusers were mistaken or incredible, but their clients refused to come forward with their own account.
Extraordinary business drama
The documents obtained by Fortune, however, provide the most complete picture to date of an extraordinary business drama - a rare, riveting look inside the world of private equity dealmaking intrigue at the height of its frenzy. There are cameo appearances by Henry Kravis of KKR, David Bonderman of TPG (formerly Texas Pacific Group), Chinh Chu of the Blackstone Group, and a walk-on by the richest, youngest industrialist you may never have heard of: 51-year-old Russian immigrant, U.S. citizen, and multibillionaire Len Blavatnik.
Reinhard & Kreinberg
Though the story of the abortive Dow LBO inevitably evokes comparisons to Barbarians at the Gate, it actually teaches very different lessons from that archetypal narrative of 1980s deal intoxication. Notwithstanding that a Dow LBO valued at $50 billion to $60 billion would probably have been the largest ever, in this tale glory and ego ultimately took a back seat to reason and pragmatism. To the chagrin of the coup plotters, the moneymen were loath to go hostile and coldly skeptical about whether the numbers made sense. Dow's fate was determined neither by a self-dealing CEO nor by swashbuckling corporate raiders, but rather by a board that was majority-controlled by independent directors. Alas, there may be no movie in this one.
As their ethnically hybrid names suggest, Pedro Reinhard and Romeo (accent on the second syllable) Kreinberg are truly worldly men. Reinhard, 62, grew up in Brazil and was schooled in Germany and the U.S. Kreinberg, 57, was born in Croatia and raised in Argentina, has lived in nine countries, and speaks six languages. Each spent his 30-plus-year career at Dow crisscrossing the globe, from Germany to Italy to Switzerland to the U.S., with frequent excursions to the Middle East. Stellar performers, each was once a leading contender for the CEO spot: Reinhard in 2000 (when Michael Parker got the nod) and Kreinberg in 2004 (when Liveris prevailed).
Reinhard was respected for his keen financial acumen and vast knowledge of the chemical industry. At the same time, independent Dow director James Ringler testified in November that Reinhard's "emotionalism at times would about drive you nuts," and that "he had ... a delivery ... that would irritate the Pope."
Kreinberg was a superb executive within his operational silo, according to three independent directors, but they also say he was "autocratic" and "close-minded" and had a "my way or the highway" attitude that was abrasive to peers. He was a "very, very difficult individual to manage," a fourth director noted in his deposition, and he liked to live large on his Dow expense account.
In late 2005, Reinhard and Kreinberg were the two point men supervising Dow's joint venture with the government-owned Oman Oil Co. Reinhard and Kreinberg handled all dealings with the Omanis, according to director Arnold Allemang, a former head of operations at Dow, and they jealously protected their turf. Their attitude, said Allemang, was, "If you want to talk to [the Omanis], you'll do it through us."
While the executives' Oman connection was key to their eventual expulsion, Reinhard had a troublesome second connection that Dow scarcely understood until months after his termination: his role at Len Blavatnik's massive private holding company, Access Industries. Blavatnik, who made his fortune in Russian oil assets, is now one of the world's richest men, with a personal net worth estimated at $7 billion to $8 billion. Access holds interests in telecommunications, media, real estate, oil, metals, and - since August 2005, when Access closed on its purchase of the Netherlands-based Basell Polyolefins - the chemicals arena.
Upon buying Basell, Access hired Reinhard as an advisor. Having turned 60, Reinhard was phasing out his operational duties at Dow, though he was staying on as a director. Dow told him he could work for Access as long as he confined himself to matters that wouldn't conflict with Dow's interests. He was also advised that because Access now had the Basell unit, he couldn't sit on the Access board, since that might violate antitrust laws barring directors from sitting on the boards of competitors.
Reinhard's conception of what constituted a conflict proved vastly narrower than Dow's. By early 2006 he was not only a member of Access's investment committee - which some Access officials referred to as its "de facto board" - but also sitting as an "observer" on board meetings of Basell itself. Reinhard assured Access that Dow was comfortable with his roles.
In March 2006, Access's Blavatnik sent Dow's Liveris a letter formally offering to acquire Dow's commodities (or "basics") divisions. Unbeknownst to Dow, Reinhard had "edited and signed off" on Blavatnik's letter before it was sent, according to Access e-mails. Liveris, who was not receptive to the overture, made no response. Reinhard, however, again without Dow's knowledge, informed Access of Dow's reaction. "Spoke briefly to Pedro," an Access official reported to Blavatnik. "Later learned that Dow approached both Kuwait and Saudi Aramco with the assets we want.... He told me/us to sit tight."
In April, when Liveris became chairman of Dow's board, he directed Dow's general counsel to write Reinhard a stern two-page letter spelling out that Dow would consider it a conflict of interest for Reinhard, when advising Access, to discuss or receive any "information about Basell." Reinhard argued with Dow's chief counsel and tried to negotiate, but Dow wouldn't budge.
Reinhard told Access nothing about the letter and disregarded its dictates. In the ensuing months, Reinhard attended Access and Basell board meetings as Basell bid for and ultimately acquired Lyondell Chemical Co., forming LyondellBasell Industries, the third-largest industrial-chemical company in the world.
During the first half of 2006, Dow's share price was languishing, and the company was regularly being approached by investment banks with unsolicited presentations proposing deals to increase shareholder value, including breakup LBOs. A common view was that Dow was undervalued because it was seen as a commodities business. If it sold its commodities segments while focusing on its higher-margin "performance chemicals" units, the share price would soar, some predicted.
In July the company's senior management and board held a weeklong strategy retreat in Newport, R.I., where they debated six strategic "optionalities," including a breakup of the company. Liveris argued that Dow's commodities and performance segments were so interdependent that it was best to maintain the company's integrated structure. Instead of a breakup, he favored an "asset light" strategy, in which Dow would "monetize" its commodities assets by, for instance, selling joint venture interests in them while keeping operational control. The proceeds would be used to expand the performance units.
The board backed Liveris's asset light strategy and rejected breakup strategies. The only dissenter was Reinhard.
That same month an Omani-led LBO bid for Dow was in gestation. A freelance consultant and wheeler-dealer named Terry Ruane approached chemical industry consultant Eddie Wilson, asking him to do a breakup valuation of Dow. Ruane and Wilson both were based in Jersey, in the Channel Islands, and both were business consultants in Oman. Ruane worked for Dow on its Omani joint venture, the Oman Petrochemical Industry Co. (OPIC), reporting to Kreinberg and Reinhard. Wilson, who had spent 25 years at Dow earlier in his career, was also a consultant to OPIC, but for the Omanis. To help with the valuation, Ruane showed Wilson a short profile of Dow that had been prepared by J.P. Morgan Cazenove, a joint venture of J.P. Morgan Chase (JPM, Fortune 500) and the British investment bank Cazenove. Wilson did the valuation but didn't hear back from Ruane for several months.
In late July, when Dow announced disappointing second-quarter results, its stock plummeted 10%, making the company an even more alluring target for a breakup bid. Officials inside Blavatnik's Access - unaware of the nascent parallel activity in Oman - began mulling an LBO of Dow as an indirect means of capturing Dow's commodities assets. In August and September they prepared a breakup analysis for Dow using the code name Achilles (because Dow's commodities unit was its "Achilles' heel" as far as share price was concerned). Remarkably, Reinhard played a key role in preparing Access's breakup analysis of Dow, according to both internal Access e-mails and the later deposition testimony of Access's mergers and acquisitions chief, Philip Kassin. Reinhard identified appropriate comparable companies for each of Dow's business segments - information not provided in Dow's 10-K - and extrapolated appropriate earnings multiples.
By mid-September, Access officials had completed their analysis. The draft noted that the "deal would most likely have to be 'hostile.'" On Sept. 18, 2006, after a Basell board meeting at its laboratory in Ferrara, Italy, Kassin, Reinhard, Blavatnik, and Basell's CEO met in a small private office, and Kassin presented his LBO proposal. When he was just minutes into it, Kassin later testified, Blavatnik cut him off, saying the deal was "too big, probably not doable," and that he had "no desire to do anything hostile." Shortly after the meeting, Kassin e-mailed a colleague about the debacle, noting, "Pedro very very very pissed."
Someone - Dow hypothesizes Reinhard - wouldn't let the idea die. In October, Terry Ruane, the same consultant who had asked Ed Wilson to do a breakup evaluation of Dow in July, contacted Kassin at Access and described an Omani-led bid to do a Dow LBO, advised by J.P. Morgan Cazenove and to be sponsored by U.S. private equity players. He urged Access to participate. Ruane told Kassin not to tell Reinhard about the Omani bid at this point, acting as if it were a secret, but in an affidavit later submitted in the litigation, Ruane says it had actually been Reinhard who told Ruane to contact Kassin in the first place. (Reinhard's and Kreinberg's lawyers have sharply challenged Ruane's credibility, with some basis: Kassin and Wilson testified that he sometimes "exaggerates" or "spins" to get deals done, and Kassin added that he sometimes works multiple sides of a deal. Ruane also has ongoing consulting contracts with Dow.)
After having coffee with Ruane in London, Kassin e-mailed Blavatnik: "The consortium preference is to have Pedro as chairman and Romeo Kreinberg as CEO." Kassin stressed that the deal might not be hostile, after all. "[Ruane] said most of the management is supportive and involved - except, obviously, Liveris." Once an LBO bid is made, a board has a fiduciary obligation to shareholders to assess it on its merits, regardless of what the CEO may think of it. If a majority of the board approves, the deal would technically be considered friendly.
Kassin set up a meeting in London between Blavatnik and Ruane to discuss an LBO of Dow that would be led by the State General Reserve Fund of the Sultanate of Oman (SGRF), an Omani sovereign wealth fund, which was prepared to ante up at least $5 billion of equity. Ruane brought with him Ian Hannam, co-head of equity capital markets at London's J.P. Morgan Cazenove, who was advising the Omanis. Again, however, Blavatnik was noncommittal at best, and Access never went forward.
On Oct. 30, Ruane and Hannam met with Reinhard and Kreinberg for the first of two meetings at the Carlton Tower in London. Some OPIC business was discussed, but the purpose of the meeting, Ruane maintained in his later affidavit, "was to discuss what a typical leveraged buyout would mean for the resulting management," with "special reference to a potential buyout of Dow."
Two Omani government ministers wanted a face-to-face with Reinhard and Kreinberg before proceeding, so Ruane arranged a meeting in Muscat. At one point the Omanis leaned across the table and asked if Reinhard and Kreinberg thought Dow would be a good investment and if they would be willing to stay in their positions to manage it. They answered yes to both questions, according to statements Ruane made to his lawyers.
Thereafter the bid moved forward in earnest. In anticipation of signing a formal engagement letter with the Omanis, the JPM Cazenove bankers notified key officials at their parent, JPM Chase, and initiated a conflicts check. The conflicts memo stated, "Buyout team led by former CFO. Not all members of current senior Dow management team are involved." Accompanying internal JPM e-mails identified Reinhard as the "former CFO." Another e-mail said, "I understand that D mgmt deliberately keeping low profile until further down track ... i.e., aiming very much for plausible deniability at this stage."
Since JPM Chase did a lot of business with Dow, the prospect of a hostile bid made some of its bankers extremely uncomfortable. But others stressed that the deal might yet win Dow board consensus. The issue then appears to have been tabled, and the signing of the engagement letter was put off pending clarification on these points.
In mid-December, Ruane brought consultant Ed Wilson, the former Dow official, back into the picture to help the bankers draw up a 100-page business plan for what was now code-named "Project Door." (The coding was half-hearted; Dow was "Door," Oman was "Oryx," and one of the Door units slated for early sale was "Door Corning.") On Jan. 19, Ruane, Hannam, Wilson, Reinhard, and Kreinberg met at the Carlton Tower again, and Wilson took the executives through the business plan.
Wilson remembered the meeting well, since he got some bad news there, he later recounted in his deposition. He had previously been told by Ruane that the two of them would be sharing a 25% slice of JPM's banking fees as their compensation on the deal. Reinhard and Ruane now informed him that the new plan was for the 25% piece to be split three ways - among Ruane, Reinhard, and Kreinberg. Wilson would just get a lump sum. Since JPM's advisory fees were then being ballparked in the $200 million range, 25% would have been about $50 million. Wilson was steamed. (Reinhard's and Kreinberg's attorneys have attacked Wilson's credibility, as they did Ruane's - and again, with some basis. After the post-termination litigation began, Wilson struck a highly unusual "cooperation" agreement with Dow under which Dow agreed not to sue him over his role in the affair, to pay him his usual consulting fee - about $4,500 a day - for time spent responding to litigation demands, and to reimburse his attorneys fees. Ruane and Wilson had some bargaining leverage because they were outside the jurisdiction of the U.S. courts.)
It was after or during this second Carlton Tower meeting that Dow CEO Liveris sent Reinhard the previously mentioned e-mail asking him what was behind the buyout talk reported in the Financial Times, only to be told that it was a stale rumor.
Kreinberg also kept mum, according to Liveris's later testimony, when the Financial Times item came up for discussion at regular meetings of Dow's top executives. "He was there," Liveris recounted, "sitting there all the time, looking very mute and unresponsive." The item was even discussed informally at Dow's next board meeting, according to the testimony of Liveris and other directors. Reinhard was present but volunteered nothing.
By this time the Omanis and JPM Cazenove bankers were almost ready to make their formal presentations to American private equity groups. Before doing so, however, they needed to tie up crucial loose ends. The head of Oman's SGRF needed to meet Reinhard and Kreinberg personally and make sure they were okay with a stingier management-incentive package than had been originally proposed. Rather than allowing top management to come away with 10% of the surviving company if it met performance targets, SGRF was scaling that back to 6%. Second, the JPM Chase bankers needed to know how many Dow board members and executives were really backing Reinhard and Kreinberg - i.e., was there really any hope of this becoming a friendly deal.
To resolve these issues, Hannam scheduled two meetings for Reinhard and Kreinberg in London on Feb. 27. At one they would meet the head of the Omani fund and at the other, JPM Chase vice chairman Bill Winters.
Two days before the critical meetings a second, more detailed newspaper story described an impending LBO bid for Dow. It predicted a "$54 billion approach ... likely to include powerful players such as KKR, Blackstone, and Carlyle Group." Upon learning of the item, Chinh Chu of Blackstone called Liveris to assure him that Blackstone was not involved. Liveris called Kravis, who said he didn't know of anything underway, but he assured him that it was highly unlikely his firm would be involved in anything hostile.
Still, Liveris took the rumors seriously. He launched "Project Fort," by asking Dow's two primary investment banks, Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500), to perform LBO analyses of Dow in anticipation of an unsolicited bid. He also hired the nation's premier takeover-defense lawyer, Marty Lipton of Wachtell Lipton Rosen & Katz.
Meantime, the LBO planners decided that the press leaks made it too risky to meet in London. Hannam moved them to the Compleat Angler, a gorgeous inn on the Thames, about 35 miles to the west. To ensure secrecy, he didn't reveal the name of the hotel and just sent cars to Heathrow to pick up the participants. He also rented the hotel's entire residents' lounge so that the congregants could meet unobserved.
According to Dow, Kreinberg created a cover story for his trip that day. He had the OPIC chairman write a bogus letter summoning him to London to discuss an invoice reimbursement dispute.
Neither meeting went well. Reinhard and Kreinberg did not commit to the Omanis' incentives package. In fact, in an internal JPM Cazenove e-mail later that day, a banker wrote that Reinhard now saw "no compelling reason for [an] Omani link" for the deal. (Dow speculates that Reinhard objected to the stingier compensation package.) At the second meeting Winters, from JPM Chase, learned for the first time that Reinhard and Kreinberg actually had no known supporters on the board, but were acting alone. Winters was "surprise[d] that only 2 individuals in loop at this stage," a JPM Chase banker wrote to Hannam. "Any approach likely to be perceived as unfriendly/hostile.... Much of above may make JPM commitment to SGRF more difficult at this stage."
Still, Winters did not call off the deal. He instructed Hannam to tell the Omanis it might yet be possible to win Dow board approval if the board were approached in the right way. Hannam was to tell the Omanis, "We remain committed to helping you get this asset."
Reinhard's and Kreinberg's lawyers claimed in court papers that their clients were surprised by the talk of an LBO at the Angler and that they "rebuffed" such proposals, telling JPM bankers that if an overture were made, Dow would "circle the wagons." Kreinberg even claimed that he had gone to the hotel expecting to meet only Ruane and discuss mundane OPIC business. But this account strains credulity. Though Wilson did not attend either meeting, he was at the Compleat Angler and had tea with Reinhard and Kreinberg after the meetings. Neither expressed any shock or surprise at the time, Wilson testified, nor any desire to drop out of the project or have it come to a halt.
On March 1, Dow CFO Geoffrey Merszei was told at a meeting in New York with Citigroup bankers that JPM Chase was involved in the LBO bid for Dow that was spurring newspaper reports. On March 5, Liveris called JPM Chase CEO Jamie Dimon, who promised to look into the question and get back to him.
Also on March 5, Wilson met with Reinhard in Zurich, according to Wilson. The meeting focused on the 25% of JPM's banking fees that Reinhard still hoped to get a piece of and that Wilson was still angry about being cut out of. "Reinhard was trying to assure me that the payment of some of the banking fees to himself and Mr. Kreinberg would not be problematic [legally or ethically]," Wilson testified. Reinhard had invited officials from a Swiss bank to the meeting, and they were arguing that "ways could be found to structure it ... without giving rise to problems." The arrangement allegedly would have involved having Reinhard and Kreinberg's shares of the banking fees sent to Wilson, who would then forward the money to them in Switzerland. Wilson refused.
On March 7, Liveris and Dimon spoke again by phone. Dimon confirmed that his bank's Cazenove unit was working on something, but he was still trying to find out more.
On March 12, yet another newspaper item appeared, the most detailed and accurate yet. The London tabloid Evening Standard, was heralding a "$60 billion deal ... masterminded by Ian Hannam out of J.P. Morgan in London," in which "the usual suspects," including KKR, were among the likely sponsors. Furious, Dow CFO Merszei called JPM Chase's Dow account representative, Christopher Iannaccone, and told him to stop work immediately. Iannaccone promised to relay the message to higher-ups.
More cold water was poured on the deal when it was formally pitched to KKR and TPG on March 13 and 14. "We don't think the numbers work," wrote one KKR banker. At TPG, David Bonderman was likewise "underwhelmed," according to a JPM e-mail.
On March 15, JPM Chase's Winters recommended pulling out of the deal in an e-mail copied to Dimon. "Based on this feedback, we should go back to Dow now with an 'all pencils down' message. I'm happy to help with damage control if needed." It appears that Dimon called Liveris that same day to convey the message (though Liveris is not certain of the date). JPM Chase also notified the Omanis and Hannam. JPM was out of the hunt.
But Reinhard may not yet have given up. Two days after JPM withdrew, he urged Kassin, the mergers and acquisitions chief at Access, to solicit more approaches to Dow. "Had long talk with Pedro last night," Kassin wrote Blavatnik. "He is in very weird position. He is playing on too many teams in my opinion."
The last newspaper leak came on April 8 and proved to be the coup de grâce for Reinhard and Kreinberg. The story reported that "a consortium of Middle Eastern investors and American buyout firms" was putting the "finishing touches" on a bid and identified JPM Chase in London as its advisor. As it happened, Dimon was scheduled to have dinner with Liveris at Dow's headquarters in Midland, Mich., the next evening. Dimon sarcastically e-mailed Winters and two others the next morning: "Considering that I am having dinner tonight with the CEO of Dow, can I get briefed about what is going on?" The bankers assured Dimon that JPM had been "tools down" since March 15.
Upon seeing the latest press account, KKR's Kravis called Liveris. According to Liveris's notes, Kravis told him his London office had been approached, but they had stopped when they found out it was hostile. He also said the Omanis were working with people "who know a lot about Dow."
Dimon's dinner with Liveris on April 9 - the "mea culpa meeting," as one JPM Chase banker referred to it - was amicable. "Mr. Dimon was very forthcoming," Liveris later testified. Dimon's "demeanor" communicated that "this was a man who had clearly found out that his company was involved in something that he ... did not support," Liveris said. "[Dimon] made reference to ... parties very, very close to Dow, and ... went on to more than insinuate that there were people that were really in the middle of this deal and that really I had to know about." Liveris pressed him for details, and Dimon promised to get back to him. Iannaccone, who had been present, reported afterward in an e-mail, "Clearly we have been dinged by this episode, but if Jamie is able to provide some color over the next couple days, we might not be in as bad a position as I thought."
Dimon fingered Reinhard and Kreinberg in a phone call to Liveris the next day. Reinhard in particular, Dimon said, was acting like a "double agent," according to Liveris's notes. "Jamie recommended I do my own homework, but if he were me, he would get these guys 'out' and off the [board of directors] asap."
Liveris broke the shocking news to the board the next day. It unanimously authorized Liveris to terminate Reinhard and Kreinberg after giving each man an opportunity to be heard. On the morning of April 12, each man offered only a lawyerly, blanket denial of wrongdoing. They were fired later that day.
The lawsuits and countersuits were filed on May 8, 2007, and settled on June 2, 2008. In addition to the confidential financial terms, Reinhard and Kreinberg publicly admitted their unauthorized LBO discussions, while the company acknowledged the men's "substantial contributions to Dow over their lengthy and illustrious careers at Dow."
"Pedro Reinhard is pleased with the settlement," his attorney Gary Naftalis said in a statement. "He greatly appreciates the company's public recognition and kind words about his illustrious career at the company." Kreinberg's attorney Stanley Arkin declined comment for this article.
"The defendants' acknowledgment that the board was right was key," says Dow's attorney David Bernick. "Once that was agreed, the only remaining question was whether to continue the litigation for the sake of getting back the last dollar of earned equity compensation. [Dow] decided that was not the appropriate path to take."
Obviously, mysteries still abound. Who misled whom into thinking the Dow board would be receptive to an LBO? Who leaked to the press? And what in God's name were these two guys thinking? Can't help you there.
To read Roger Parloff on legal affairs, go to fortune.com/legalpad.
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