Dow Chemical and DuPont Agree on Merger Deal

“It’s clear there are some redundancies, but I don’t think they are as large as they could be if two other companies were merging”, said Wagner, who is now CEO of the ag technology company Agrinos in Davis, California. Dow has 500 employees in DE, so streamlining will be necessary.

Since their founding in the 19th century, both companies have made significant discoveries in chemistry, changing how homes are built and painted, and how food is grown and stored.

The Dow-Dupont deal is a rare combination of equals, rather than a straight purchase – the stock ratio is calculated so that all shareholders of each component company will come away owning half of the new entity.

Although they’re not splashy consumer brands, Dow Chemical and DuPont manufacture a variety of products that consumers and businesses use every day, including automobiles, apparel, electronics, household goods, personal-care products and safety equipment. DuPont announced a companywide restructuring plan to reduce $700 million in costs that includes employee and contractor layoffs affecting about 10 percent of the company’s workforce. Edward Breen, now DuPont’s CEO, will become the new company’s CEO. Like the Dow-DuPont deal, that one involves a possible corporate split later on to form separate companies, one focused on innovative products and the other on generic drugs.

” … There are numerous advantages for the company to continue having a strong presence in MI”.

As a chemical powerhouse, Dow and DuPont combined would be the second-largest chemical company in terms of revenue after BASF of Germany.

No word on how this will affect local jobs.

“We’re stockpiling commodities and demand is not picking up”, said Tim Courtney, chief investment officer of Exencial Wealth Advisors.

“Now, with DuPont potentially eliminating the last vestiges of its last footprint here, the impact on a small state like DE is potentially catastrophic”, he says. Executives estimate the combined firm will achieve $3 billion in savings as well as $1 billion in growth synergies. Today, each of the companies alone has a market capitalization of about $60 billion.

In a recent conference call, Breen said that DuPont and Dow Chemical “fit together like hand in glove”. “The strategic nature of what we could pull off is incredible”. The new firm, to be called DowDuPont, will be worth $130 billion on the basis of current stock prices of the two firms. The deal announced Friday is being billed a merger of equals, to be called DowDuPont. M&A activity in 2015 hit a record $4.6 trillion as of Monday, according to Dealogic. It’s behind these deals: Allergan-Pfizer, Anheuser-Busch InBev-SABMiller, BG Group-Royal Dutch Shell and Time Warner Cable-Charter Communications.

Dell’s $66 billion acquisition of EMC Corp.

For Liveris at Dow, “this has been a long journey”, he told analysts.

Breen took over as DuPont CEO after the resignation in October of Ellen Kullman, who just a few months earlier fended off a proxy challenge by Trian Fund Management, a hedge fund led by activist investor Nelson Peltz.

The deal between Midland, Michigan-based Dow and Wilmington, Delaware-based DuPont combines two of the biggest and oldest US chemical producers and is a prelude to an eventual split of the combined company into three discrete businesses, Dow and DuPont said on Friday.

The deal is a prelude to a split-up of the combined company into three discrete businesses focused on agriculture, materials and specialty products in the next 18-24 months.