NEW YORK (Reuters) - Litigation between Dow Chemical Co (DOW.N) and two former senior employees who were fired by the company, has been settled, the two sides said on Monday.
In April 2007, Dow fired Romeo Kreinberg, head of Dow’s performance plastics operations, and Pedro Reinhard, a senior adviser and member of the board, after accusing them of engaging in unauthorized discussions to sell the company.
Kreinberg and Reinhard both acknowledged they participated in talks about a potential leveraged buyout of Dow that were not authorized by Dow’s board and not disclosed to directors.
Dow, the largest U.S. chemical maker, was the subject several leveraged buyout rumors and was linked with a number of possible deals in the early part of 2007.
The Midland, Michigan-based company repeatedly denied all reports that it was a leveraged buyout target. Kreinberg and Reinhard had originally denied all of Dow’s allegations against them.
Dow started legal proceedings against the former employees, while Kreinberg and Reinhard counter-sued Dow.
Kreinberg and Reinhard admitted in a statement Monday that Dow’s actions in terminating their employment were appropriate under the circumstances.
The terms of the settlement were kept confidential.
“We are extremely pleased that this disappointing chapter in Dow’s history is closed,” said Dow spokesman Chris Huntley, “The board’s swift and decisive response in April last year has been vindicated.”
Kreinberg and Reinhard agreed it would have been appropriate to have informed the chief executive and the board of the leveraged buyout discussions.
“Dow has allowed Kreinberg and Reinhard to retain a portion of the long-term incentives they earned in the years prior to their termination,” said Huntley, but added that under the terms of the settlement they have substantially compromised their position.
In a court filing last month, Dow presented a detailed outline of the meetings both former employees allegedly held with investment bankers, private equity firms and sponsors, while they were attempting to engineer a buyout of the company.
“Pedro Reinhard is pleased with the terms of the settlement,” said Jonathan Wagner, a lawyer with the firm Kramer, Levin, Naftalis and Frankel, “He is glad the matter is behind him and looks forward to focusing on his many other interests.”
“He greatly appreciates the company’s public recognition and kind words about his illustrious career in the company,” said Wagner.
Stanley Arkin, who represented Kreinberg in the matter, was not immediately available for a comment.
Shares of Dow, which had risen above $47 when the takeover rumors were active a year ago, were down 1.8 percent at $39.66 in afternoon trade on the New York Stock Exchange.
Reporting by Euan Rocha; editing by Jeffrey Benkoe and Gunna Dickson