Dow Chemical Co and DuPont have agreed to combine in an all-stock merger valued at $130 billion, creating a market leader that will then be split into three publicly-traded businesses covering agriculture, material sciences and specialty products.
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Since their founding in the 19th century, both companies have made significant discoveries in chemistry, changing how homes are built and painted, and how food is grown and stored.
As a chemical powerhouse, Dow and DuPont combined would be the second-largest chemical company in terms of revenue after BASF of Germany. He’s concerned the proposed merger, along with its plan to eventually break up the new Dow-DuPont into three separate companies, will mean layoffs.
Ed Breen the current CEO at DuPont will be the new company’s CEO, while Andrew Liveris the CEO at Dow will become an executive chairman.
Dow boss Andrew N. Liveris will be the combined firms’ executive chairman.
Even in those markets, Dow and DuPont compete against large rivals like Syngenta AG, Monsanto Co. and Bayer AG, Miner said.
The merger, if it goes through, is expected to slash numerous jobs. So far, companies have struck some $4.4 trillion of takeovers in 2015, eclipsing 2007 as the top year on record for deals, according to Dealogic.
DuPont shares fell 5.4 percent to $70.56 in midday trading.
Former DuPont CEO Ellen Kullman abruptly resigned in October, just a few months after successfully fending off a proxy challenge by Trian Fund Management, a hedge fund led by activist investor Nelson Peltz.
The merger however triggered worries that it will give the company oligopolistic powers in areas like seeds for farmers and certain chemicals. Dow welcomed board nominees backed by billionaire William Loeb past year, avoiding a similar battle. They estimated it would take up to two years to complete the tax-free split.
“The biggest impact will certainly be in the agriculture market, where the seeds and crop chemical industries are to undergo rapid consolidation”, SunTrust’s Sheehan said.
The New York investment firm said it was approached by the companies to “assist in negotiations”, including on structure and governance of the combined entity and the planned spinoffs. The company will have dual headquarters in Midland, Mich., and Wilmington, Del., where they are now based. DuPont said it expects sales growth next year to be “challenging”.
“These are highly complementary businesses”. Its material sciences business, which includes plastics, chemicals and other materials, would yield $51 billion in revenue.
DuPont in another statement said it would cut costs by 700 million in 2016 affecting 10 percent of its global workforce. “And it affects the community, in a lot of ways”, Heffron says, including outside the industry – like for nonprofits and the arts, of which DuPont has been a corporate patron.
“The state is committed to supporting those affected by DuPont’s cost cutting in Delaware”, said Delaware Gov. Jack Markell. To cap a busy morning, Dow said it will buy out Corning Inc.to become the full owner of their 72-year-old silicones joint venture, Dow Corning Corp. Regulators will be especially concerned about the agricultural sector, which could see big divestitures, antitrust experts said.
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Investors will get one DowDuPont share for each Dow share, and 1.282 DowDuPont shares for each one of DuPont. 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.
