Then by 2018 the companies will split into three independent publicly traded companies-focused on agriculture, chemicals and materials, and specialty products.
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DuPont scientists also invented synthetic rubber Neoprene, used in products such as laptop sleeves, wetsuits, and yes, that beer and soda can cozy. Both are contending with sinking commodity prices and a strengthening US dollar that have pressured their revenue. Starting with founder Éleuthère Irénée du Pont, the company was led by du Pont family members for more than 100 years.
The deal appears to be a rare example of a true merger of equals. “Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities”, said Dow Chairman and CEO Andrew Liveris. “We believe this is the right way”.
Although the two companies share some markets, Dow and DuPont executives say they don’t expect regulators will force them to make many divestitures before approving the merger.
The company will have dual headquarters in MI and DE, where each now is based.
The creation of the three entities would likely take at least 18 months after the deal is finalized, Reuters reported. Earlier this year, Missouri-based Monsanto, the world’s largest seed company, abandoned a $46.5 billion hostile bid for Swiss pesticide giant Syngenta. As well as the $3 billion of cost savings, the companies said the deal will create additional earnings of about $1 billion.
Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, said in a statement that the proposed merger “demands serious scrutiny”.
Any overlap would be limited to the electronics business, since all of the remaining units come from DuPont. Mr. Breen said in the interview that the companies plan to divest only minor pieces of their businesses “but nothing that would move the needle”.
“This will create tremendous value for our shareholders and employees”, Liveris said on a conference call.
Under the terms of the transaction, Dow shareholders will receive a fixed exchange ratio of 1.00 share of DowDuPont for each Dow share, and DuPont shareholders will receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share. Shares of Anheuser have risen about 8% since the deal was announced. Shares in both companies had risen since The Wall Street Journal reported on Tuesday that they were in merger talks. “Most of our big ones we’ve talked to and they love the deal”. The combined company will be the largest beer maker in most major markets and seize about 30% market share worldwide even after selling some assets.
Upon completion of the transaction, Liveris will become executive chairman of the DowDuPont board of directors. Figuring out a way to operate together is often easier said than done.
In a separate announcement today, which will further impact the Materials Science business, Dow announced that it had signed definitive agreements to restructure the ownership of Dow Corning. Friday’s deal is “a totally different scenario”, Mr. Breen said.
Mr. Breen told analysts that the three-way breakup would likely be a one-off event, rather than spinning off the units at different times.
There is one catch: Dow must close above $53.72 for 20 days in a 30-day trading period, and the stock was changing hands for just $52.94 at 12:26 p.m.in New York Friday.
DuPont was so entwined with Delaware’s families and fortunes that residents called the company “Uncle Dupey”. Whiting, 58, grew up in Midland, Michigan, where his great grandfather, Herbert Henry Dow, founded Dow Chemical in 1897.
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DuPont announced a companywide restructuring plan, including employee and contractor layoffs affecting about 10% of the company’s workforce, to reduce $700m in costs. DuPont said it expects sales growth next year to be “challenging”.
