DuPont Up After Reports BASF Could Make Counter Bid Against Dow

According to reports, the world's biggest chemicals company, BASF SE (ADR) BASFY may be making a move to push out Dow Chemical Co DOW for E I Du Pont De Nemours And Co DD.

While a Dow-DuPont merger has been in talks for months now, and an agreement made December 11, 2015, Bloomberg reported Sunday, "BASF SE is working with advisers and financing banks on the merits of making a counter bid for DuPont, Co."

Although, "the German chemical producer hasn't made a decision yet about proceeding with an offer," speculation is high as Dow is down and BASF and DuPont climb on the day.

Why It Could Make Sense

In a Fortune article out Monday, there may be some weight to the rumors.

Related Link: Bernstein On Dow-DuPont Merger Structure: You're Doing It All Wrong

The article explained, "BASF chief executive Kurt Bock had told Bloomberg last month that he had considered a deal in agricultural chemicals before the announcement of the Dow-Dupont merger, but had decided against it. DuPont's regulatory filings show its chairman and CEO met with ‘a large, publicly traded chemical company' in November, shortly before announcing its deal with Dow."

Additionally, criticism on the Dow-DuPont's strong focus on "short-term cash generation at the expense of long-term research" has also led to support for the counter-bid thesis.

"By contrast, BASF is a company that believes very much in the old-fashioned conglomerate model," according to Fortune. "It's also a vertically-integrated company with billions of dollars of capital tied up in an oil and gas subsidiary, Wintershall, that guarantees the company's input of feedstock for its downstream operations."

At the time of this writing, BASF representatives have "declined to comment on ‘speculation'" according to Fortune, and representatives from both BASF and DuPont declined to comment to Bloomberg as well.

At Time Of Writing…

DuPont was seen trading up 2.11 percent at $64.51.

Dow Chemical was down 1.29 percent at $49.64.

BASF was up 1.12 percent at $70.07.