Dow was founded in MI in 1897 to extract bromide from brine, and DuPont in Delaware in 1802 as gunpowder maker E.I. du Pont de Nemours and Company. The new commodity chemicals segment – described by Dow and DuPont as a “material science company” – had revenues of about $US51 billion and will be overseen by Liveris.
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DuPont (NYSE:DD) and The Dow Chemical Company (NYSE:DOW) today announced that their boards of directors unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals.
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“We are creating the world’s leading agriculture company by bringing together DuPont’s unrivalled market access and industry-leading germplasm and breeding capabilities, and Dow strengths and traits and crop protection”.
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Dow and DuPont will merge to create a company valued at $130 billion before splitting up into three seperate companies.
The companies expect to find a total of about $3 billion in cost synergies and gain $1 billion in growth synergies through the deal.
The split into three independent operations is set to take place 18 to 24 months after the completion of the merger, which is subject to regulatory approval. DuPont says it will be cutting its global workforce by 10%.
New chairman… Dow Chemical Company CEO Andrew N. Liveris. As per the deal, 1.282 shares will be owned by each shareholder, for each DuPont share, while for each Dow share, Dow Chemical will get 1 share.
The merger, one of the biggest of the year, would allow Dow and DuPont to rejig assets based on the diverging fortunes of their businesses.
According to its website, Dow Louisiana is the largest chemical company in the state with 6,000 full-time and contract employees.
Some $1.5bn synergies will be available in material science, and $300m in specialist products.
The companies jointly made the announcement Friday morning and said it will be a merger of equals. The mammoth deal will need to be reviewed by federal regulators. Liveris in a statement called the deal “a game-changer for our industry” that will adjust the centuries-old corporations to the realities of the modern global chemicals business.
DuPont Chief Executive Officer Edward Breen said Friday there was little direct competition between the two companies, apart from some overlap in the agriculture sector. If the DowDuPont deal closes first, Dow Corning would join the new company when the subsequent deal wraps up. Combined pro forma 2014 revenue for Material Science is approximately $51 billion. Breen, perhaps best known for his role in the breakup of Tyco International Plc., replaced Kullman as CEO in November, setting up the basis for the merger.
Nelson Peltz, an activist investor who has been prodding DuPont to break up, and Daniel S. Loeb, who has been doing the same for Dow, have yet to weigh in on the merger.
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Trading… Peter Tuchman on the floor of the New York Stock Exchange watching Dow Chemical and DuPont rising sharply following reports that the two companies were talking about a combination. The two companies will choose those directors over the next four to five months, and will likely hire new directors to serve on advisory boards set up to help plan the three eventual spinoffs.
