One would be an agricultural company with an estimated revenue of $19 billion, while the other two would concentrate on material science with $51 billion in revenue and specialty products with $13 billion in revenue. Dow Chemical stock slid 2.8% and DuPont 5.5% after jumping earlier in the week on deal rumors.
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Edward Breen, chairman and CEO of DuPont and Andrew Liveris, president, chairman and CEO of Dow. Dow Chemical’s stock fell $1.70 a share, or 3.1 percent, to $53.21. While the plan was hatched by the companies’ chief executives, they worked alongside activist investor Nelson Peltz, who… The third business, selling seed and crop protection chemicals, generated adjusted revenue of about $19b. Dow avoided a potential proxy fight past year by adding four independent directors to its board giving seats to two Loeb nominees.
Culminating a week’s worth of speculation and suspense, Dow Chemical and DuPont have announced the largest-ever merger between two chemical companies.
Sheehan said the deal also could spark other mergers in the ag-chemical industry. Even in those markets, Dow and DuPont compete against large rivals like Syngenta AG, Monsanto and Bayer AG, Miner said. The company will have dual headquarters in Midland, Michigan, and Wilmington, Delaware, where they are now based. 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.
“DuPont and Dow are two titans of American industry and the proposed merger demands serious scrutiny”, he said in a statement.
“All I can say is you know until we know more it’s hard to conclude anything”, Paquette said.
About 10% of the cost cutting will come from R&D, mostly in agriculture, where executives see redundancies in work on seed traits.
“These are highly complementary businesses….” A merger likely would result in significant job cuts because of overlapping businesses.
One motive for the merger is to cut costs. Antitrust Concerns: Despite its size and complexity, the deal could overcome antitrust concerns with modest divestitures, according to analysts who track the companies. In addition, the companies announced separate restructuring steps. DuPont said its own effiency measures will save it about $700 million.
Dow said it would take full ownership of Dow Corning Corp., which it jointly owns with Corning Inc.
The companies said the merger would mean “run-rate cost synergies of approximately $3 billion, which are projected to create approximately $30 billion of market value”.
Under the terms of the deal, Dow shareholders will receive a fixed exchange ratio of one 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.
Dow and DuPont shareholders will each own about 50 percent of DowDuPont. Dow Automotive is a leader in thermoset plastics, which can not be remolded and are used in exteriors and “in-car” products, while DuPont’s automotive unit primarily focuses on thermoplastics, which soften when heated, and various “under the hood” products.
Dow and Dupont have a combined annual revenue of around $83 billion, with operating profit of about $15 billion.
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The three companies would focus on agriculture, materials and speciality products.
