But competition authorities are expected to pay close attention to the transaction due to the extensive overlaps between the pair’s agricultural operations. Peltz has called for DuPont’s agriculture nutrition and health and industrial biosciences units to be combined into a single growth company separate from the more cyclical businesses of performance materials safety and protection and electronics and communication.
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Dow shareholders would own 52 percent of the new company after preferred shares are converted, the companies said.
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The companies have been struggling with falling demand for farm chemicals and low commodity prices.
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The combination will help the firms save about £1.9billion in the first two years, with the possibility of saving another £650million. DuPont Chief Executive Ed Breen said in an interview that they plan to divest only minor pieces of their businesses-“nothing that would move the needle”, he said. Dow, meanwhile, said it is taking full ownership of Dow Corning, now a 50-50 joint venture between Dow and Corning.
DuPont, founded in 1802, makes products used in petrochemicals, pharmaceuticals, food and construction. It abandoned a $45 billion offer for the Swiss company in August. “To me it checks all the boxes of a great deal and a way to create value for our shareholders”. The agriculture sector will likely receive the most scrutiny.
The Pesticide Action Network calls Dow, Dupont, BASF, Monsanto, Syngenta, and Bayer the ‘Big 6’ of the seed, pesticide, and biotechnology industries. “You’re nearly creating a duopoly in the market, and that’s a problem”, she said. DuPont says it will be cutting its global workforce by 10%. Dow and DuPont shareholders will own about 50 percent, respectively, of the combined company.
Dow Chemical CEO Andrew Liveris said in the statement on Dow Corning that “the addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow’s existing, strong science and engineering competencies across new chemistries”.
The new company’s board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors.
The company will have dual headquarters in MI and DE, where each now is based.
Dow Chemical said in a separate statement that the Dow Corning deal will add to earnings per share and cash flows and yield more than $1 billion in annual earnings before interest, taxes, depreciation and amortization. Combined pro forma 2014 revenue for specialty products was approximately $13bn.
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The third business, selling seed and crop protection chemicals, generated adjusted revenue of about $19 billion.
