DuPont, Dow Chemical Announce $130 Billion Mega-Merger

Dow and DuPont have announced a $130 billion merger, combining two of the world’s largest science and technology companies. Dow and DuPont shareholders will each own approximately 50 percent of the combined company. DuPont, based in Wilmington, is expected to shed more than 5,000 jobs as part of the merger.

The new company will be called DowDuPont, but that will become three independent, publicly traded companies through tax-free spin-offs in 18 to 24 months.

The companies will be:

• Agriculture company: A global agriculture company that unites DuPont’s and Dow’s seed and crop protection businesses. “The complementary offerings of the two companies will provide growers across geographies with a broad portfolio of solutions and greater choice,” a statement said.
• Material science company: It’ll consist of DuPont’s Performance Materials segment, and Dow’s Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions, and Consumer Solutions (excluding the Dow Electronic Materials business) operating segments. “The combination of complementary capabilities will create a low-cost, innovation-driven leader that can provide customers in high-growth, high-value industry segments in packaging, transportation, and infrastructure solutions, among others with a broad and deep portfolio of cost-effective offerings,” a statement said.
• Specialty products company: A technology and innovation-driven specialty products company focused on unique businesses that share similar investment characteristics and specialty market focus. The businesses will include DuPont’s Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business. “Together, their complementary offerings create a new global leader in Electronics Products, and each business will benefit from more targeted investment in their productive technology development and innovation capabilities,” according to a statement.

Since the news just broke, it’s unclear how the merger will affect local jobs, though the Inquirer reported DuPont would cut more than 5,000 jobs worldwide. But both companies have large workforces in the region. DuPont is based in Wilmington, Del. Dow is based in Midland, Mich.

“Each of the businesses will have clear focus, an appropriate capital structure, a distinct and compelling investment thesis, scale advantages, and focused investments in innovation to better deliver superior solutions and choices for customers,” according to a DuPddont statement.

Dupont said that the merger will result in run-rate cost synergies of approximately $3 billion, which are projected to create approximately $30 billion of market value.

Andrew N. Liveris will be named executive chairman of DowDuPont and Edward D. Breen will be named CEO.

“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. 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 in a statement. “For DuPont, this is a definitive leap forward on our path to higher growth and higher value. This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies. Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each business will be a leader in attractive segments where global challenges are driving demand for these businesses’ distinctive offerings.”