DuPont, Dow to merge in 130 bln United States dollars deal

Some national farm leaders met the announcement with quizzically, if not skeptical, eyes, and hoped farmer groups will have the opportunity study and then comment on how such a merger of two large agricultural seed and agrichemical providers might impact US farmers.

Shareholders of Dow Chemical will get 1 share in the new DowDuPont for each Dow share, while DuPont shareholders will get 1.282 shares for each DuPont share.

Dow Chemical Co. and DuPont Co. – two historic giants of US industry – will attempt a merger that would form a colossal chemical producer worth more than $130 billion.

Executives billed the deal as a merger of equals. DuPont CEO Ed Breen, 59, will be CEO of the new company. Dow shares fell 3.9% to $52.79 at 9:39 a.m.in NY while DuPont dropped 5.8% to $70.24. DuPont said 10 percent of its global work force would be affected.

Activist investor Nelson Peltz, who has long championed breaking up stodgy conglomerates, has been pressing DuPont to separate its agriculture, nutrition and biosciences units from its building and safety materials divisions.

The biggest of the three new companies by revenue would be material sciences, catering to the packaging, transportation and infrastructure industries and competing against Germany’s BASF, Honeywell and 3M. The companies said a new specialty products company would focus on electronics. They estimated it would take up to two years to complete the tax-free split. The deal is the largest ever in the chemicals industry. The companies “have historically unprecedented power over world agriculture, enabling them to control the agricultural research agenda, heavily influence trade and agricultural agreements and subvert market competition”, the organization says.

Michael Ritzenthaler, an analyst for Piper Jaffray, said he expects Monsanto to renew its bid for Syngenta.

Upon completion of the transaction, Liveris, President, Chairman and CEO of Dow, will become Executive Chairman of the newly formed DowDuPont Board of Directors and Breen, Chair and CEO of DuPont, will become Chief Executive Officer of DowDuPont. The company will be headquartered in both Midland and Wilmington.

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. Iowa Republican Senator Chuck Grassley said in a statement combining two titans of American business would require “serious scrutiny” from regulators. “Now I would be surprised if we have 5,000”, Robb said. “It’s a merge and spin model where we’ve already pre-determined the businesses coming out, so this is not a scale issue in the traditional regulator/Department of Justice sense”.

The companies said the merger would mean “run-rate cost synergies of approximately $3 billion, which are projected to create approximately $30 billion of market value”. In addition, the companies announced separate restructuring steps. “If it closes after the DuPont deal it comes into the material sciences”, Fitterling said.

It announced on Friday that it would buy the remaining stake in the Corning joint venture.

The merger transaction is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders.

Liveris, 61, will become executive chairman of the company, which will be owned 50-50 by current shareholders of DuPont and Dow.