Industrial Giants DuPont, Dow Chemical Announce $130 Billion Merger

DuPont shares fell 5.4 percent to $70.56 in midday trading.

“When I look at DuPont and Dow, I see businesses that fit together like hand and glove”, Breen said.

Under the terms of the merger, Dow shareholders would receive one share of the new combined company for every one of their shares, while DuPont shareholders would receive 1.282 shares each.

But one former Dow Agro executive said that if Dow Agro was going to merge with another company, the DuPont deal is the best one it could have hoped for, and will “absolutely” leave a significant operation in Indianapolis for years to come.

In May, DuPont 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 Chemical has produced plastics, chemicals, hydrocarbons, and agrochemicals for 118 years. Dow Automotive is a leader in thermoset plastics, which can not be remolded and are used in exteriors and “in-car” products, while DuPont’s automotive unit primarily focuses on thermoplastics, which soften when heated, and various “under the hood” products. This would occur as soon as feasible, which is expected to be 18-24 months following the closing of the merger, subject to regulatory and board approval.

It could also prompt a renewed flurry of takeover bids for European rivals, with Syngenta AG the most likely target.

Dow and Dupont have a combined annual revenue of around $83 billion, with operating profit of about $15 billion.

Monsanto said Friday it would not act rashly and likes its position in the marketplace.

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. “It’s a very large transaction”.

Specialty Products Company: A technology driven innovative leader, focused on unique businesses that share similar investment characteristics and specialty market focus. “Both DuPont and Dow have individual issues they’re grappling with”. But for the most part, the companies have minimal overlap and in some cases, even complementary product offerings, he said.

“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.

“The (seed) market is already dominated by Monsanto”.

“You’re nearly creating duopoly in the market, and that’s a problem”, Ms. Moss told Reuters. “I’ll be listening to Iowa farmers and consumers about any concerns they may have with this proposal”.

Gov. Jack Markell (D-Delaware), in a statement Friday morning, committed to helping any DE workers affected by the DuPont cuts, and says he’ll work to keep the new company in the state.

Klein and Co, Lazard and Morgan Stanley are Dow’s financial advisers.

Dow Chemical’s head Andrew Liveris will be the executive chairman of the new company, with new DuPont CEO Ed Breen serving in that same capacity with the DowDuPont. After preferred shares are converted, Dow shareholders will own 52 percent of DowDuPont. The two companies declined to comment on reports of a possible merger.

The new company’s board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors. It will take a pretax impairment charge of about $780 million.

Of the three separate companies, the biggest by revenue will be material sciences, which will sell to packaging, transportation, and infrastructure industries. Major competitors would be Germany’s BASF, Honeywell and 3M.