Dow, DuPont Agree on $130B Mega Merger Deal
Chemical giants DuPont and The Dow Chemical Company on Friday announced a mega merger valuing their combined firms at $130 billion that is expected to shake up the global agriculture business and affect numerous industries that rely on their services.
DuPont Chief Executive Ed Breen will be CEO of the new firm, to be called DowDuPont, while Dow Chemical CEO Andrew Liveris will be its executive chairman. The deal will eventually split the combined firm into three smaller companies, focused on agriculture, materials and specialty products – the latter of which will include electronics, the company announced in a press release.
The deal will make the combined firms potentially larger than agricultural giant Monsanto. It could take 18 to 24 months to split the companies in three because of the regulatory scrutiny this deal will face in the U.S. and other nations, the companies estimated.
“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,” said Breen.
Liveris called the deal “a game changer” for the chemical industry that would create value for both shareholders and customers, adding that it would be a “merger of equals” that would divide ownership equally and allow both firms to decide how the split into three companies will unfold.
This dual decision making will matter for the employees of both companies as executives consider layoffs and the possibility of closing facilities to eliminate costs after the deal. The companies plan to maintain dual headquarters in Midland, Michigan, and Wilmington, Delaware, but also said they will “optimize” their physical footprint.
DuPont published a separate statement on Friday announcing $650 million in “employee separation costs,” hinting at layoffs following the merger.
The deal, announced hours before the market opened on Friday, did not help the companies’ stock prices. Shares of DuPont dipped 7 percent in premarket trading while Dow’s slipped 2 percent.
The merger of these two historic chemical firms is the latest of the mega deals announced in 2015 that have already made this year the biggest ever for mergers and acquisitions worldwide, according to financial software company Dealogic.
DuPont Chief Executive Ed Breen will be CEO of the new firm, to be called DowDuPont, while Dow Chemical CEO Andrew Liveris will be its executive chairman. The deal will eventually split the combined firm into three smaller companies, focused on agriculture, materials and specialty products – the latter of which will include electronics, the company announced in a press release.
The deal will make the combined firms potentially larger than agricultural giant Monsanto. It could take 18 to 24 months to split the companies in three because of the regulatory scrutiny this deal will face in the U.S. and other nations, the companies estimated.
“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,” said Breen.
Liveris called the deal “a game changer” for the chemical industry that would create value for both shareholders and customers, adding that it would be a “merger of equals” that would divide ownership equally and allow both firms to decide how the split into three companies will unfold.
This dual decision making will matter for the employees of both companies as executives consider layoffs and the possibility of closing facilities to eliminate costs after the deal. The companies plan to maintain dual headquarters in Midland, Michigan, and Wilmington, Delaware, but also said they will “optimize” their physical footprint.
DuPont published a separate statement on Friday announcing $650 million in “employee separation costs,” hinting at layoffs following the merger.
The deal, announced hours before the market opened on Friday, did not help the companies’ stock prices. Shares of DuPont dipped 7 percent in premarket trading while Dow’s slipped 2 percent.
The merger of these two historic chemical firms is the latest of the mega deals announced in 2015 that have already made this year the biggest ever for mergers and acquisitions worldwide, according to financial software company Dealogic.
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