DuPont and Dow plan to merge

The boards of DuPont and The Dow Chemical Company have unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals. The combined company would be named DowDuPont and have a market capitalisation of approximately $130 billion.

It is the intention of both companies’ boards that, following the merger, DowDuPont would pursue a tax-free separation into three independent, publicly traded companies. Each would be a strong, focused business with powerful innovation capabilities, enhanced product portfolios, focused capital allocation and a distinct competitive position. These three businesses are:

• Agriculture company: a pure-play agriculture company that unites DuPont’s and Dow’s seed and crop protection businesses.
• Material science company: a pure-play industrial leader consisting of DuPont’s performance materials segment, as well as Dow’s performance plastics, performance materials and chemicals, infrastructure solutions, and consumer solutions operating segments.
• Specialty products company: a technology-driven innovative leader, focused on businesses that share similar investment characteristics and specialty market focus. The businesses will include DuPont’s nutrition and health, industrial biosciences, safety and protection, and electronics and communications businesses, as well as the Dow electronic materials business.

Advisory committees will be established for each of the businesses.

“This transaction is a game changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” said Dow Chairman and CEO Andrew N Liveris.

“This transaction is a major accelerator in Dow’s ongoing transformation, and through this we are creating significant value and three powerful new companies. This merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers.”

“This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the combination of two highly complementary global leaders and the creation of three strong, focused, industry-leading businesses,” added DuPont Chairman and CEO Edward D Breen. “Each of these businesses will be able to allocate capital more effectively, apply its powerful innovation more productively and extend its value-added products and solutions to more customers worldwide.”

Upon completion of the transaction, Liveris will become executive chairman of the DowDuPont board of directors and Breen will become the company’s chief executive officer. DowDuPont’s board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors.

The merger transaction is expected to close in the second half of 2016 subject to customary closing conditions, including regulatory approvals and approval by both Dow and DuPont shareholders. The subsequent separation of DowDuPont would be expected to occur 18–24 months following the closing of the merger.

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