DuPont Pushes Back Dow Deal Closing Date Amid EU Scrutiny--Update
January 24 2017 - 11:00AM
Dow Jones News
By Jacob Bunge
DuPont Co. pushed back the closing date for its merger with Dow
Chemical Co., as European antitrust authorities scrutinize the
companies' agricultural businesses.
DuPont Chief Executive Ed Breen said the companies are
negotiating potential divestitures in their pesticide operations to
win approval for the deal, which would create an industrial
behemoth worth nearly $129 billion.
The deal, announced in December 2015, has faced delays as
antitrust regulators sought reams of information concerning the
companies' competing businesses in insecticides, weedkillers and
crop seeds. Dow and DuPont initially expected their deal to close
late last year, but Mr. Breen told analysts Tuesday it is now
unlikely to be completed until after March.
"The main concern is in the crop protection area," Mr. Breen
said on a conference call discussing DuPont's fourth-quarter
results. "That's where we've been focused with a remedy
package."
Mr. Breen said the negotiations also concern some research and
development commitments to soothe competition authorities' concerns
that farmers could be left with fewer product choices, and a
slimmer pipeline of new seeds and sprays.
"One of the reasons we're doing the merger is to create a new ag
company with more resources in new product development," Mr. Breen
said.
DuPont and Dow aim to unite their vast portfolios of chemicals,
crop seeds, plastics and electronic components, eliminate $3
billion in annual costs and split into three separate companies
within about 18 months. One company will be focused on agriculture,
another on materials, and the third on specialty products like food
ingredients and safety equipment. Mr. Breen said Tuesday the
regulatory delays hadn't changed the cost-cutting target or the
timeline for the breakup.
The companies are pursuing their deal amid global challenges
facing industrial and agricultural companies. Regulators also are
evaluating proposed agricultural deals between Bayer AG and
Monsanto Co., and China National Chemical Corp. and Syngenta
AG.
DuPont expects the U.S. dollar to continue strengthening in
2017, Chief Financial Officer Nick Fanandakis said, making
U.S.-made products more expensive abroad. Meanwhile developing
economies like Brazil have stalled and political uncertainty in the
European Union is growing.
DuPont forecast first-quarter 2017 earnings would fall 18% but
increase 8% on an adjusted basis. The past year's cost-cutting
efforts are paying off, Mr. Breen said, but DuPont's agricultural
division will suffer as U.S. farmers plant fewer acres of corn this
year in favor of soybeans, a smaller business for the company.
Shares of DuPont gained 1.5% early in Tuesday's trading
session.
DuPont reported an overall profit of $353 million or 29 cents a
share for the quarter, compared with a loss of $421 million, or 26
cents a share, a year earlier. Excluding items, the company earned
51 cents a share, up from 27 cents.
Revenue dropped 2% to $5.21 billion. Analysts polled by Thomson
Reuters had forecast earnings of 42 cents on $5.29 billion in
revenue.
--Imani Moise contributed to this article
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
January 24, 2017 10:45 ET (15:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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