“When I look at DuPont and Dow, I see business that fit together like hand in glove, which gives us the ability to create three highly-focused companies because of the combined assets, capabilities and scale ” said Breen on a morning conference call announcing the merger. The company will have dual headquarters in Midland, Michigan, and Wilmington, Delaware, where they are now based. Once the two are combined, they plan to split into three separate companies, consisting of agricultural chemicals, specialty products and materials, like plastics. 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. Both companies were struggling to become more competitive globally in agriculture, with Dow even considering selling its agriculture sciences business before the merger deal.
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The specialty products firm, with about $13 billion in projected sales, will combine Dow and DuPont businesses in electronic materials.
If the merger is cleared by regulators, the new company will be owned equally by current Dow and DuPont shareholders. Separation of three DowDuPont companies would be expected to occur 18-24 months following the closing of the merger.
Similarly, Dow CEO Andrew Liveris told analysts in October that there were “potential synergies in a newly consolidating agricultural market” regarding Dow AgroSciences.
Mr. Liveris said there will “almost certainly” be a new leader of the materials company, which could keep the Dow name after it is spun out.
DuPont was founded in 1802, and became the foundation for one of the country’s greatest family fortunes.
DuPont, which is 213 years old, makes products used in petrochemicals, pharmaceuticals, food and construction. It abandoned a $45 billion offer for the Swiss company in August.
DowDuPont’s board is expected to have 16 members, with each company contributing eight directors, the companies said. Companies are finding it more hard to grow, they are looking for the revenue and cost synergies that could materialize from a deal like this. The merger faces a gauntlet of regulatory approval and approval by Dow and DuPont shareholders.
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The deal will, in agriculture, create the opportunity for $1.3bn of deal benefits, such as cutting out duplicated costs, out of a total of some $3bn from the Dow-DuPont merger. And each has sought separately in recent years to reinvent itself as a maker of more-profitable products while facing pressure from major investors agitating for faster, bolder moves. He added that the material science company is the most likely branch to hang on in DE, if at all (the committee will be headed by Liveris), because DuPont has the employees and facilities at its Chestnut Run office complex to do the job. “To the extent that they are happy with DuPont now, the employees, the business decisions made at DuPont Pioneer, could only probably improve to better focus on farmers as customers”, King said. On a pro-forma basis, their combined revenue would be $83 billion, according to a presentation Friday.
