Dow Chemical: Dubai Ports World Redux?

Dow Chemical Co. is downplaying buyout rumors, after a UK tabloid reported that KKR and several Middle Eastern investors are prepping a $50 billion bid. A company spokesman says that Dow has “no interest” in a leveraged buyout, because it believes it can provide the most shareholder value by remaining a public entity.

Now there are plenty of reasons to dismiss the UK report — for example, the same paper published a very similar report two months ago – but “shareholder value” isn’t one of them. After all, this supposed bid would be at between $52 and $58 per share, whereas Dow hasn’t traded above $50 in years…

But I digress. The point of this post is to posit a political query – rather than a financial one. Let’s assume, for the sake of argument, that such an offer is indeed in the offing, and that the Dow board of directors accepts. The issue that next arises is not so much whether or not shareholders would accept (they would, after holding out for a few more bucks), but whether the United States would accept. You know, the special committee made up of talk radio and cable news denizens.

This is where I see the real problem. Not only would an American icon be taken over by Middle Eastern bigwigs, but Dow does have some fairly serious national security responsibilities (in the broad, dependency sense). Plus, who knows when we’ll want to use napalm again…

For the record, I find such concerns to be ignorant at best, and xenophobic at worst. Ditto for the manufactured Dubai Ports World controversy last year. But expect it nonetheless, with Blackstone, Carlyle or TPG joining KKR at the last minute as a replacement equity participant.

Update: And the wingnuts will lead the way