Dow-DuPont merger: the essential “news you can use”

On December 11, 2015, DuPont and Dow announced that their boards of directors unanimously approved a definitive agreement under which the companies will combine in an all-stock merger of equals with a combined market capitalization of approximately $130 billion at announcement.

Next steps

The two companies will operate as independent entities until the transaction closes, which is expected to be in the second half of 2016. The subsequent separation of DowDuPont, which the companies intend to pursue, would be expected to occur 18-24 months following the closing of the merger.

The spin-offs

Additionally, the combined company intends to subsequently pursue a separation into three independent, publicly traded companies through tax-free spin-offs – which will include a leading global pure-play Agriculture company; a leading pure-play Material Science company; and a leading technology and innovation-driven Specialty Products company.

DuPont CEO Ed Breen will lead the Agriculture and Specialty Products Committees and Dow CEO Andrew Liveris will lead the Material Science Committee.

These Committees will oversee the respective businesses, and will work with Liveris and Breen to pursue a separation of the businesses into independent, standalone entities.

The Advantages as seen by DuPont, Dow

• Strong Industrial Logic: Highly complementary companies create strong, focused businesses with enhanced scale, unique growth strategies and differentiated technologies.

• Financially Compelling: Merger of equals unlocks significant market value through total cost synergies of approximately $3 billion.
  • Tax-free structure maximizes value.
  • Creates three powerhouse companies.

• Customers Win: Superior solutions, complementary offerings and expanded choices.

• Attractive Investment Profile: Creates distinct financial profiles and clear investment thesis for each business.

See our “The DowPont merger: From the known-knowns to the unknown-unknowns”