Chemical giants DuPont and Dow agree €118bn merger

Activist investors often put improving a company’s stock price ahead of workers needs and community investment.

Chamber of Commerce CEO Rich Heffron says he expected something like this after DuPont CEO Edward Breen took the helm of Wilmington’s flagship chemical company. “We believe this is the right way”.

Liveris will become executive chairman of the new company, while DuPont’s chief executive Ed Breen will be his CEO. The company will have dual headquarters in MI and DE where the two companies are now based. The combined company would sell about 41% of US corn seeds and related genetics, for example.

“There is a big execution risk”, Yefremov said. “We don’t see much real significant overlap here, which is pretty incredible”, he said, adding that the combined ag business would be balanced between seeds and crop protection. Even in those markets, Dow and DuPont compete against large rivals like Syngenta AG, Monsanto and Bayer AG, Miner said.

“It’s a very unique deal”, Liveris said.

She was briefed by Dow officials shortly after the formal announcement. Further reductions are likely as the combined company streamlines ahead of its planned breakup.

DuPont shares, part of the Dow Jones industrial average, fell 5.1 percent at $70.73, while Dow slid 3.4 percent at $53.05.

EUROPE DOWN: Britain’s FTSE 100 dropped 2.2 percent.

The new company will be called DowDuPont. “Most of our big ones we’ve talked to and they love the deal”.

While the merger would represent the 18th largest corporate deal of all-time, according to Dealogic, it would trail the 2015 deals made by Allergan and Pfizer; Anheuser-Busch InBev and SABMiller; BG Group and Royal Dutch Shell; and Time Warner Cable and Charter Communications.

Dow Chemical shareholders will get one DowDuPont share for each Dow Chemical share they hold, while DuPont shareholders will get 1.282 shares in DowDuPont for each DuPont share they own. “I hope it will also be good news for the Midland community”. Subsequently, the parties intend to pursue the separation of these units into three independent, publicly-traded companies through tax-free spin-offs. Friday’s deal is “a totally different scenario”, Mr. Breen said.

The merger of Dow and DuPont continues a consolidation trend in the plastics materials market, following other major deals such as Dow buying Union Carbide and the combinations of Exxon and Mobil, and Phillips and Chevron. The new board will include eight directors from each company.

DowDuPont’s board is to have 16 members, half from each side.

For Liveris at Dow, “this has been a long journey”, he told analysts. It will combine Dow’s plastics business, a leader in polyethylene and elastomers, with DuPont’s materials unit, which makes engineering polymers and ethylene copolymers. “I do want to eventually go to the place where the future of the company is not just beholden to my presence”, he said on the conference call.

That’s the case with Dow Chemical and DuPont, which have been wrestling with weak prices for crops and other commodities, currency fluctuations and pressure from activist investors who want the firms to bolster their growth prospects and cut costs.

DuPont expects 2016 sales growth to be “challenging”, due to economic weakness in agriculture and emerging markets.

Corning said that after the venture restructuring, Hemlock will be 40.25% owned by Corning through the newly formed entity, 40.25% owned by Dow Corning and 19.5% owned by Shin-Etsu Handotai Co. Dow said the move is expected to generate more than $1 billion in additional adjusted earnings and increase its product offerings in the building and construction, consumer care, and automotive markets.