Dow, DuPont announce 'merger of equals'

By Spencer Chase

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Dec. 11, 2015 - Chemical giants Dow and DuPont have announced an all-stock merger that will create a new $130 billion company.

The merger, jointly announced by the companies Friday morning, is expected to create $1 billion in “growth synergies” for the new DowDuPont company. The deal will likely be subject to intense regulatory scrutiny, but the companies say they expect the merger transaction to close “in the second half of 2016.”

Once the two companies are combined, they plan to pursue a separation into “three independent, publicly traded companies” 18 to 24 months after receiving regulatory approval. One company will be an agricultural enterprise that unites DuPont's and Dow's seed and crop protection businesses. There will also be a material science company that combines DuPont's performance materials segment with similar Dow interests. The final company will be a specialty products company that will combine DuPont's nutrition, health, safety, electronics, and communications concentrations with Dow's electronic materials business.

Together we can feed the Bees"

In a statement, Andrew Liveris, Dow's chairman and CEO, called the deal “a game-changer for our industry” that “reflects the culmination of a vision we have had for more than a decade.

“This transaction is a major accelerator in Dow's ongoing transformation, and through this we are creating significant value and three powerful new companies,” he said. “This merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers.”

Edward Breen, chairman and CEO of DuPont, called the merger “an extraordinary opportunity” that will lead to three more efficient, more powerful companies.

“This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies,” Breen said. “Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each business will be a leader in attractive segments where global challenges are driving demand for these businesses' distinctive offerings.” 

Liveris will be the executive chairman and Breen the CEO of the new combined company. Advisory committees will be established for each new business.

DuPont's ownership of DuPont Pioneer gives the company a sizable seed portfolio to bring to the merger, and Dow's AgroSciences division brings a similarly large agricultural chemical offering.

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In a separate statement, DuPont announced $700 million in cost restructuring that will impact about 10 percent of its global workforce, which numbered 63,000 at the end of 2014.

Senate Judiciary Committee Chairman Chuck Grassley promised to take a close look at the deal.

“DuPont and Dow are two titans of American industry and the proposed merger demands serious scrutiny,” the Iowa Republican said in a statement. “Federal regulators are responsible for examining and approving the transaction to make sure that it's not anticompetitive. Vigorous enforcement of the antitrust laws is imperative to maintaining an open, fair and competitive marketplace.  I'll be listening to Iowa farmers and consumers about any concerns they may have with this proposal, and the Judiciary Committee will be exercising its appropriate oversight function.” 

National Corn Growers Association President Chip Bowling said NCGA will review the deal and its impact on corn producers.

“With respect to the proposed merger, we anticipate that we will have an opportunity to submit comments regarding the effect this merger may have on agricultural research, innovation, grain marketing, and the competitive pricing of farm inputs,” Bowling said in a statement. “We will do all we can to protect farmer interests and preserve an open and competitive marketplace.”


The American Soybean Association also said it would take a close look at the impacts of the merger.

“As always, we welcome competition and innovation to the industry, while keeping the best interests of soybean growers at the forefront,” ASA President Richard Wilkins said in a statement. “ASA looks forward to the opportunity to provide comments to the companies and U.S. regulatory authorities that must approve any merger, and will continue to study how this merger will affect soybean farmers.” 

CropLife America, a crop protection advocacy group, declined immediate comment on the merger.

(This story was updated at 2:15 p.m.)

 

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