Dow, DuPont Push Back Merger Date as Divestitures Begin -- 2nd Update
March 31 2017 - 10:30AM
Dow Jones News
By Austen Hufford
Dow Chemical Co. and DuPont Co. again pushed back the time frame
to finish their merger, but they said the deal is still on track as
DuPont moved forward with plans for divesting assets to satisfy
European regulators.
The companies now expect the deal, which has been delayed by
intense regulatory scrutiny, to close in August 2017. When the pact
was first announced in December 2015, it was expected to close in
the second half of 2016. The companies' most recent target was the
first half of this year.
Earlier this week, the European Union's competition watchdog
cleared the merger on the condition they sell parts of DuPont's
global pesticides business and associated research and development,
as well as Dow's acid copolymers and ionomers business.
Following the EU decision, DuPont said Friday that it would sell
its pesticide assets to Philadelphia-based FMC Corporation in
exchange for that company's health and nutrition business and $1.2
billion in cash. FMC will receive DuPont's chewing pest insecticide
portfolio, its global cereal broadleaf herbicides and a substantial
portion of its global crop protection research-and-development
efforts.
Divestitures are commonly required in large deals to assuage
concerns over market power and consolidation within specific
markets and industries.
The Dow-DuPont behemoth would serve as a vehicle for cutting
costs before splitting into three separate businesses within two
years after the deal closes. Those companies, each to be publicly
traded, would focus on agriculture, material sciences and specialty
products in nutrition and electronics.
On Friday, the companies said the first spun-off unit would be
the material science company, expected within 18 months after
closing. Dow and DuPont said they still expect their merger to
generate about $3 billion of cost synergies and $1 billion of
growth synergies.
FMC said the units it is buying will generate about $1.5 billion
in revenue in 2017. The health-and-nutrition business had 2016
revenue of $743.5 million.
The move will make FMC the fifth-largest crop protection
chemical company in the world by revenue. Shares of FMC jumped 16%
on the news, while shares of Dow fell 0.3% and DuPont fell 0.8% in
morning trading.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
March 31, 2017 10:15 ET (14:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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