WASHINGTON, March 31, 2017 - DuPont is selling part of its crop protection business to FMC Corp. and acquiring that company’s health and nutrition business to satisfy conditions imposed by the European Commission when it approved DuPont’s merger with Dow Chemical on Monday.
The DuPont-FMC transactions should go a long way toward satisfying concerns by regulators in the U.S. and other countries such as Australia and Brazil that are reviewing the $130 billion union between Dow and DuPont. The companies said they now expect the merger to close sometime in August.
“The remedy we’ve entered into ... is a very global remedy that addresses concerns many of the regulators have around the world,” said Jim Collins, executive vice president of DuPont, in an interview this morning with Agri-Pulse. (See DuPont's press release here.)
Collins will be the chief operating officer of the DowDuPont agriculture company. Once the merger is completed, DowDuPont will split into three separate, publicly traded companies focusing on agriculture, material science, and specialty products.
Collins said the deal with FMC is a good one for both companies, as it will allow FMC to get back into core research and development. At the same time, FMC’s nutrition and health business will fit neatly with DuPont’s current assets, which include “functional ingredients that go into many finished food products.”
“All in all, I think it was just a terrific deal,” Collins said. “It serves the best interests, really, of a lot of the stakeholders associated with the merger and it really allows us now to clear the decks on the pathway” to close the Dow-DuPont merger.
Mark Douglas, president of FMC Agricultural Solutions, agreed, telling Agri-Pulse that although “this is a major change for us,” it’s one that FMC has “been contemplating for a while. We could see what was occurring in the marketplace with the mega-mergers. To add value in this space you have to bring technology to growers, retailers, and distributors.” (See FMC's press release here.)
“There are superb molecules that DuPont had to divest, some of the best molecules in the industry and then, allied to a very robust, world-class R&D network,” Douglas said.
Of the assets that DuPont had to divest, Douglas said, “Rynaxypyr is by far the market leader and by far, the biggest blockbuster molecule since glyphosate.” Known by the trade names Altacor, Coragen and Prevathon, it is registered for use on vegetables, pome and stone fruit, tree nuts, grapes, corn, cotton and many other crops.
One of the European Commission’s major conditions was that DuPont divest its Cereal Broadleaf Herbicides and Chewing Insecticides portfolios, as well as its Crop Protection research and development pipeline and organization – with the exception of seed treatment, nematicides, and late-stage R&D programs, “which DuPont will continue to develop and bring to market,” Dow and DuPont said. Also not included in the divestiture are “personnel needed to support marketed products and R&D programs that will remain with DuPont.”
Douglas said the herbicide portfolio they are acquiring as part of the deal “fits very well with our herbicide portfolio. For us, it’s almost the ideal remedy that they had to divest.”
Asked how the acquisition of these products and a rich research and development pipeline will position FMC against major market players who are merging like DowDuPont, ChemChina and Syngenta, and Bayer and Monsanto, Douglas said, “We have always been direct competitors. The big difference now is that we have a powerhouse of a discovery engine where we can produce our own molecules and have ability to control our own future.”
For growers, Douglas said there is a key message:
“You have another choice now, a Tier 1 research-based company that is going to bring you novel technologies.”
Collins said that DuPont is divesting “less than half” of its global crop protection business, and that the newly formed company will now be able to focus more attention on developing products for wheat and rice growers, while still “maintaining momentum in corn and soybeans.”
“In this industry, innovation is a requirement, it’s not a choice,” Collins said. “The moment you stop inventing and bringing new capability, that’s the moment you start to decline. Our message to customers: This creates a strong American-based company that is even better focused on research and development and innovation and is going to be better able to meet their needs going forward.”
Under the terms of the deal, FMC will provide DuPont $1.6 billion to reflect the difference in the value of the assets being exchanged, including cash of $1.2 billion and working capital of $425 million, DuPont said in a news release.
“Following the divestiture, the Agriculture division of the merged company will retain strong crop protection assets, including an excellent portfolio in corn and soy broadleaf and grass control, a robust cereal weed control portfolio, DuPont’s strong position in disease control, and Dow AgroSciences’ industry leading insecticide portfolio,” Dupont said in a release.
The transaction with FMC is expected to close in the fourth quarter of 2017, “subject to the closing of the DuPont and Dow merger, in addition to other customary closing conditions, including regulatory approvals,” DuPont said.
(Sara Wyant contributed to this article)
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