Dow, DuPont to Review Breakup Plan After Merger
May 11 2017 - 12:13PM
Dow Jones News
By Jacob Bunge and David Benoit
Dow Chemical Co. and DuPont Co. will reassess how the chemical
giants plan to separate into three companies following their
merger, after shareholders of both companies raised questions about
the details of each new company.
The companies said on Thursday said that the combined
DowDuPont's board of directors will launch "a comprehensive review"
of the businesses that are slated to go into three planned spinoffs
after the deal's closing, including another look at cost-reduction
plans and the timeline for the spinoffs.
The plan came as they also named the new directors on
Thursday
Andrew Liveris, currently Dow's chief executive and chairman,
will serve as executive chairman of the merged DowDuPont from the
closing of the deal, expected by September, through April 1 next
year. Mr. Liveris had originally been expected to retire this
summer, but is staying on to see the deal he long sought
through.
The planned review of the businesses comes as the combination
nears its closing, after being held up longer-than expected by
antitrust reviews. The boards had previously portrayed the split
work as completed, barring a few minor tweaks. But throughout the
delay, a debate has simmered among directors and among investors if
the original plans for how to execute the three-way breakup were
the best for the remaining companies.
Dow and DuPont in December 2015 unveiled their megadeal that the
companies pitched to investors as a precursor toward separating the
combined entity into three independent companies focused on
agriculture, industrial materials, and specialty products like
solar-panel components.
But some analysts and investors had questioned the distribution
of the companies' businesses across the three planned spinoffs.
The main concern, from shareholders including activist Trian
Fund Management, a DuPont holder, and Third Point LLC, a Dow
investor, has been the mix of businesses going to the planned
materials business and the planned specialty business, people
familiar with the matter said.
"It's at this point clear that investors overwhelmingly favor a
change in how the companies will look after the spins," Bernstein
analysts wrote in report this week. "The ideal outcome is a clean
ag company, a clean commodity company, and then either a portfolio
specialty products company or a breakup of the specialties into
smaller companies that are up for sale."
The investors have pushed to make the materials business, viewed
as Dow 2.0, into a pure petrochemical business, and move everything
else to specialty, the people said. Dow's Mr. Liveris told
investors at that company's annual shareholder meeting on Thursday
that the materials business is likely to be "the first company out
of the gate."
The companies spent weeks mapping out the breakup plan in late
2015, including in meetings with Trian, before announcing their
merger and said the plan would be largely unchanged. They
structured the merger to need two-thirds of the combined board to
approve any change to the split.
The new details on Mr. Liveris' continued role also follow
concerns raised by some analysts after Mr. Liveris in April left
open the possibility of staying on longer than previously planned,
as longer-than-expected regulatory reviews delayed the deal's
closing. Third Point's Daniel Loeb previously had sought Mr.
Liveris' exit, but the two now have a better relationship after
agreeing to settle their disputes last year.
After serving as executive chairman, Mr. Liveris will transition
to chairman of the combined DowDuPont's board through July 1, 2018,
then retire. Jeff Fettig, CEO of Whirlpool Corp. and Dow's lead
director, said Thursday the arrangement provides "continuity of
leadership" during the transition.
Shares of Dow declined 1%, while DuPont shares were down
1.2%.
Write to Jacob Bunge at jacob.bunge@wsj.com and David Benoit at
david.benoit@wsj.com
(END) Dow Jones Newswires
May 11, 2017 11:58 ET (15:58 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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