Dow And DuPont Lay Out Merger Plan

Dow Chemical Co. and DuPont Co. announced a merger that would fuse two stalwarts of American industry into a giant worth about $130 billion and would reshape the chemical and agricultural industries.

The merger calls for Dow Chemical stockholders to receive one share of the company for each share they now own while DuPont holders would exchange each of their shares for 1.282 shares of DowDuPont.

The combined company will be named DowDuPont, with plans to pursue a separation into three independent, publicly traded companies through tax-free spin-offs. Dow and DuPont shareholders will each own approximately 50 percent of the combined company, on a fully diluted basis, excluding preferred shares.

Dow Chemical CEO Andrew Liveris said in the statement on Dow Corning that "the addition of a silicones position will expand our product offerings across multiple businesses while driving innovative solutions that will enable us to go deeper into key end markets by leveraging Dow's existing, strong science and engineering competencies across new chemistries".

In morning trading, shares of E.I. du Pont de Nemours and Co. fell $4.12, or 5.8 percent, to $70.45 while Dow Chemical Co. shares lost $2.41, or 4.4 percent, to $52.50.

The specialty products company, with a combined revenue of $13 billion in 2014, would sell materials to the electronics and communications industries, among others. By 2008, it was the company's largest business segment.

It is not clear if the deal will lead to any job cuts or plant closures at the companies' automotive units, though the combined entity expects to save about $3 billion annually on efficiencies within two years of merging. DuPont Pioneer, Johnston, Iowa, offers Plenish high-oleic soybeans used for the production of soybean oil that is free of partially hydrogenated oils and trans fat.

Following the closing of the transaction, the new company, DowDuPont, will be dual-headquartered in Midland and Wilmington, Del., where DuPont is headquartered today.

Meanwhile, DuPont completed a spinoff this year of its struggling performance chemicals unit into a separate company called Chemours.

The proposed agriculture business would unite DuPont's and Dow's seed and crop protection businesses. "About "$1 billion in growth synergies" are also expected to be achieved, according to officials. Last year's combined revenue from the two companies was about $51 billion. In recent years however both companies have focused on agriculture as global demand for increased food supplies has driven sales of genetically engineered seeds fertilizer herbicides and pesticides. In these roles, both Liveris and Breen will report to the Board of Directors.

The deal will, in agriculture, create the opportunity for $1.3bn of deal benefits, such as cutting out duplicated costs, out of a total of some $3bn from the Dow-DuPont merger.

"The merger will have a limited impact on activity in either company's location or sites" since the firms' products and research strengths are complementary and don't overlap significantly, said Ry Wagner, who was the leader of global ventures and new technology at Dow Agro from 2009 to 2013.

Dow said it would take full ownership of Dow Corning Corp., which it jointly owns with Corning Inc.