The rise of activist investors in chemicals

Activist investors are making an impact on all industriesNumber of activists in all industries; strategies employed

Sources: Activist Investor; A.T. Kearney analysis

21%

13%

11%5%3%

47%Boardchanges

2010 2012 201420132011

203

160150

8976

2.5x

Balance sheet

Other governance Remuneration

Business

Portfolio restructuring

Shareholder Target Stake1 Activist agenda

Third Point(Daniel Loeb)

Dow ChemicalRoyal DSMFMC Corp.

5.2%3%1.2%

Notable activist investors arebreaking up chemicals majors

1 Ownership stake as of December 31, 2014Sources: Activist Insight, ICIS, IHS Chemical Week, Moody's, chemistryworld; A.T. Kearney analysis

• Split petrochemical or specialty business and increase segment reporting transparency• Sell or spin o� lower-performing units

Trian(Nelson Peltz)

DuPont 2.3% • Spin o� performance chemicals division and split remainder into a performance materials and an agro science division

• Reduction of holding company costs

Pershing Square(Bill Ackmann)

AirProductsPlatform Specialty Products

9.8%26.4%

• Appoint new leadership and restructure reporting segments to increase transparency• Restructuring of board membership and management positions

JANA Partners(Barry Rosenstein)

AshlandRockwoodFMC Corp.

7.6%3.5%3.7%

• Increase dividend and share repurchases; restructure to focus on specialty chemicals• Benefit from spin-o� of performance additives and TiO2 businesses• Not announced; FMC in process of separating into two independent public companies

FrontFour Capital/Quinpario Partners

FerroInnophos Holdings

1.6%3.3%

• Appoint new board members favorable to activist shareholder groups• Review strategic agenda and explore possible sale of the company

Cornwall Capital AmericanPacific

14.8% • Appoint new board members

Cevian Capital Alent 21.9% • Appoint new management and revise strategic direction on M&A, capex, cash returns

While share prices often benefit from activist engagement, the e�ect is often short-lived

Sources: Bloomberg; A.T. Kearney analysis

Dow Chemical (Third Point Partners)

Ashland (Jana Partners)

DuPont (Trian)

Period of above-index share priceStock price

S&P 500 Chemicals90

100110120130140

May 13 Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13Sep 13Jul 13

Disclosure of activist investor

80

100

120

140

160

Jan 13 Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13Sep 13Jul 13May 13Mar 13

Disclosure of activist investor

80

90

100

110

120

Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13

Disclosure of activist investor

For more informationon on A.T. Kearney’s2015 Chemicals ExecutiveM&A Report, please visit: www.atkearney.com/chemicals