Dow Chemical and DuPont Announce Merger

Posted on 12/21/2015 12:48:03 PM By ASC

Dow Chemical Company and DuPont have agreed to combine in an all-stock merger valued at $130 billion that will then be split into three publicly-traded businesses covering agriculture, material sciences and specialty products. If the merger is approved, the new company will be called DowDuPont. DuPont’s Chief Executive Officer Ed Breen will be CEO of the new company and Dow CEO Andrew Liveris would become executive chairman.

The company would maintain dual headquarters in Wilmington, Delaware, DuPont's current headquarters, and Midland, Michigan where Dow is headquartered. DuPont shareholders would receive 1.282 shares of DowDuPont for each DuPont share and Dow shareholders will get 1.00 share of DowDuPont for each Dow share.

After preferred shares are converted, Dow shareholders will own 52 percent of DowDuPont. DuPont reports 2016 sales growth to be "challenging," due to economic weakness in agriculture and emerging markets. It plans to slash about 10 percent of its work force and take a pretax charge of $780 million. The three-way split is likely to be 18 to 24 months after the deal closes, which is expected in the second half of 2016.

The biggest of the three new companies by revenue would be material sciences, catering to the packaging, transportation and infrastructure industries. The specialty products company will sell materials to the electronics and communications industries as well as to the safety and protection sectors. The combined adjusted revenue was about $13 billion in 2014. The third business, selling seed and crop protection chemicals, generated adjusted revenue of about $19 billion.