“Just a handful of large chemical companies including Dow and DuPont already control most of the seed supply used to grow crops like corn and soybeans, as well as the herbicides that genetically engineered seeds are created to be grown with”, said Wenonah Hauter, executive director, Food & Water Watch in a statement.
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“What we announced today with Dow Corning makes a science and materials powerhouse that is going to be based here”. Like the Dow-DuPont deal, that one involves a possible corporate split later on to form separate companies, one focused on innovative products and the other on generic drugs.
The combination will help the companies save about $3 billion in costs in the first two years, with the possibility of saving another $1 billion, Dow and DuPont said.
Each company would stand on its own, but benefit from savings gained from being part of the larger entity, said Jim Fitterling, vice chairman and chief operating officer of Dow Chemical. The material science company would combine DuPont’s performance materials segment with Dow’s performance plastics, performance materials and chemicals, infrastructure solutions, and consumer solutions units, excluding its electronic materials business.
At the same time, DuPont announced a cost-saving plan that will involve cutting about 10 percent of staff.
Breen, on a conference call with investors, noted that about $300 million will be cut from research and development operations, with most of that occurring in the agriculture business. The combined company will be called Dow DuPont, and the restructuring will have a big impact on the thousands of people in our area who work for both companies.
Breen said on CNBC that Peltz was “very supportive” of the Dow deal.
Breen told analysts that the two companies would fit together like “hand in glove” with little product overlap.
Dow and DuPont shares fell on Friday after soaring earlier in the week following reports of negotiations between the two companies. Combined pro forma 2014 revenue for Material Science was about $51 billion.
The two companies have been making chemicals in Louisville for decades in West Louisville. 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.
Diana Moss, president of the American Antitrust Institute, confirmed Friday that “any merger on the agricultural inputs side of DuPont and Dow will get antitrust scrutiny”.
“The bigger and more transformative the deal, the more likely it will in fact affect competition in some fashion, even with a remedy”, Grunes said.
The merged company will be named DowDuPont and it will have a combined market capitalization of approximately 130 billion dollars at announcement.
It was around then that Whiting first heard rumors that Dow might be looking to sell or merge its agricultural business, he says.
Klein and Company, Lazard, and Morgan Stanley & Co. Combined pro forma 2014 revenue for specialty products was approximately $13bn.
Besides DuPont Nutrition & Health, the planned specialty products company also would include DuPont’s Industrial Biosciences, Safety & Protection, and Electric & Communications as well as the Dow Electronic Materials business.
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Evercore and Goldman, Sachs & Co. are serving as DuPont’s financial advisors for the transaction, with Skadden, Arps, Slate, Meagher & Flom LLP acting as its legal advisor.
