Dow, DuPont to merge in all stock deal

DuPont shares were down over 1 percent in early trading on Friday, while Dow’s were down over 4 percent.

The board of directors of both companies unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals, to be called DowDuPont and consist of three highly focused leading business units-Agriculture, Materials Science, and Specialty Products. Shares of The Dow Chemical Co. rose 12 percent to close at 56.97.

In its patent application for Lycra, DuPont highlighted some of the features that would make Lycra famous: The “outstanding properties” suggesting “many applications in the film and fiber fields”, including a “high elasticity”. The new company will be known ad DowDupont.

Chemical giants DuPont and Dow Chemical agreed to merge in an all-stock deal valuing the combined company at $130bn in a win for activist investors that could spark further consolidation in the farmchemicals industry.

He ultimately sold his company, a biomass energy producer called Decker Energy International, Inc., in 2012 and is now president of the Herbert H. and Grace A. Dow Foundation, a major benefactor in MI.

“Typically the result of mergers is job cuts and companies move out of communities”. With its home in MI since 1897, Dow has approximately 53,000 employees globally and about 6,000 employees in the state.

DuPont has manufacturing plants in Kanawha, Washington and Wood County. In the years since the two companies expanded into a wide range of specialty and commodity chemical operations. It also created Kevlar, which is used in body armor.

The new agriculture enterprise, which will vie against Monsanto and other competitors, would be formed out of the combination of Dow’s and DuPont’s seed and crop protection businesses.

Until the three firms are spun off, Liveris will have oversight over the businesses designated for the materials unit, while Breen will be responsible for agriculture and specialty products. By 2008 it was the company’s largest business segment. Yet, a gradual-but-steady economic recovery has emboldened companies and their advisers in recent years.

Company officials pointed to other more general sources of synergy. So something will give here on the ag side.

“Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities”, said Dow’s chairman and CEO, Andrew Liveris. They estimated it would take up to two years to complete the tax-free split. In May, CEO Ellen Kullman won a proxy battle waged by Trian Fund Management, the activist investor co-founded by Nelson Peltz, which said a breakup of the company would save billions of dollars in costs. Dow welcomed board nominees backed by billionaire William Loeb past year, avoiding a similar battle.

“Just a handful of large chemical companies including Dow and DuPont already control most of the seed supply used to grow crops like corn and soybeans, as well as the herbicides that genetically engineered seeds are created to be grown with”, she said.

Antitrust regulators may look favorably on the deal given the three-way split, but, ultimately, must determine how the merger will affect competition among various markets involved.