Once both companies are combined, they will be split into three, independent, publicly-traded companies: an agriculture group, a material science company and a specialty products business. 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. Dow Chief Executive Andrew Liveris would become executive chairman of the new company, DowDuPont, while DuPont’s CEO Ed Breen would be his CEO, the two firms added.
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The union would generate cost savings of about $3 billion in the first two years, with $1 billion in other savings possible, Dow and DuPont said.
About $1 billion in “growth synergies” is expected from the merger, which is pending regulatory approval.
The new company’s board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors. The subsequent breakup of DowDuPont into three companies is expected to occur 18-24 months after the merger closes.
And the third company will control Dow and DuPont’s “specialty products”, which includes the companies existing health, nutrition and electronic communications arms.
DuPont announced a companywide restructuring plan to reduce $700 million in costs that includes employee and contractor layoffs affecting about 10 percent of the company’s workforce. Those will be split into agriculture products, material science, and specialty chemical products.
In agricultural chemicals, the merged company would overtake leader BASF, while in seeds the combination of Dupont Pioneer and Dow would challenge Monsanto, said Diana Moss, president of the American Antitrust Institute. Both companies had been pressured to consider breaking up.
DuPont and The Dow Chemical Co. will combine into a new company called DowDuPont, officials said Friday, capping days of speculation about a possible merger of the chemical giants.
“We will continue to advocate that Delaware’s many advantages can be of major benefit to the new companies”, he said.
It is unknown what the merger could mean for the hundreds of West Virginians employed at Dow’s facilities in South Charleston and Institute or DuPont’s remianing portion of the Washington Works plant, south of Parkersburg.
Shares of Corning (GLW) were surging pre-market Friday after the company and Dow Chemical (DOW) said they sealed definitive agreements to restructure the ownership in the Dow Corning joint venture.
Corning Incorporated (NYSE:GLW) has announced that it will swap its 50% stake in Dow Corning Corporation for 100% share in a newly-formed company. Committees of each company will appoint the leaders of the three new standalone companies before they spin-off.
“Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers”, said Breen.
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Klein and Co, Lazard and Morgan Stanley are Dow’s financial advisers.
