DuPont and The Dow Chemical Company announced that their boards of directors unanimously
approved a definitive agreement under
which the companies will combine in an
all-stock merger of equals. The combined
company will be named DowDuPont.
The parties intend to subsequently
pursue a separation of DowDuPont into
three independent, publicly traded companies through tax-free spin-offs. This
would occur as soon as feasible, which is
expected to be 18-24 months following
the closing of the merger, subject to regulatory and board approval.
The companies will include a leading
global pure-play Agriculture company;
a leading global pure-play Material
Science company; and a leading technology and innovation-driven Specialty
Products company.
“This transaction is a game-changer
for our industry and reflects the culmi-
nation of a vision we have had for more
than a decade to bring together these two
powerful innovation and material science
leaders,” said Andrew N. Liveris, Dow’s
chairman and CEO. “Over the last decade
our entire industry has experienced tec-
tonic shifts as an evolving world presented
complex challenges and opportunities –
requiring each company to exercise fore-
sight, agility and focus on execution. This
transaction is a major accelerator in Dow’s
ongoing transformation, and through this
we are creating significant value and three
powerful new companies.”
“This is an extraordinary opportunity
to deliver long-term, sustainable share-
holder value through the combination of
two highly complementary global leaders
and the creation of three strong, focused,
industry-leading businesses,” said Edward
D. Breen, chairman and CEO of DuPont.
“For DuPont, this is a definitive leap for-
ward on our path to higher growth and
higher value. Longer term, the three-way
split we intend to pursue is expected to
unlock even greater value for shareholders
and customers and more opportunity for
employees as each business will be a leader
in attractive segments where global chal-
lenges are driving demand for these busi-
nesses’ distinctive offerings.”
Upon closing of the transaction, the
combined company would be named
DowDuPont and have a combined mar-
ket capitalization of approximately $130
billion at announcement. Under the terms
of the transaction, Dow shareholders
will receive a fixed exchange ratio of
1.00 share of DowDuPont for each Dow
share, and DuPont shareholders will re-
ceive a fixed exchange ratio of 1.282
shares in DowDuPont for each DuPont
share. Dow and DuPont shareholders
will each own approximately 50% of the
combined company, on a fully diluted ba-
sis, excluding preferred shares.
The transaction is expected to deliver
approximately $3 billion in cost synergies, with 100% of the run-rate cost synergies achieved within the first 24 months
following the closing of the transaction.
Additional upside of approximately $1
billion is expected from growth synergies.
It is the intention of both companies’
boards of directors that, following the
merger, DowDuPont would pursue a tax-free separation into three independent,
publicly traded companies with each targeting an investment grade credit rating.
The three businesses that the boards
intend to separate are:
• Agriculture Company: Leading global
pure-play agriculture company that
unites DuPont’s and Dow’s seed and
crop protection businesses. Combined
pro forma 2014 revenue for Agriculture
is approximately $19 billion.
• Material Science Company: A pure-
play industrial leader, consisting of
DuPont’s Performance Materials seg-
ment, as well as Dow’s Performance
Plastics, Performance Materials and
Chemicals, Infrastructure Solutions,
and Consumer Solutions (exclud-
ing the Dow Electronic Materials
business) operating segments. The
combination will create a leader in
high-growth, high-value industry
segments in packaging, transporta-
tion, and infrastructure solutions,
among others with a broad and deep
portfolio of cost-effective offerings.
Combined pro forma 2014 revenue
for Material Science is approximate-
ly $51 billion.
•Specialty Products Company: The
businesses will include DuPont’s
Nutrition & Health, Industrial
Biosciences, Safety & Protection and
Electronics & Communications, as
well as the Dow Electronic Materials
business. Together, their complementary offerings create a new global
leader in Electronics Products.
Combined pro forma 2014 revenue
for Specialty Products is approximately $13 billion.
Advisory Committees will be estab-
lished for each of the businesses. Breen
will lead the Agriculture and Specialty
Products Committees, and Liveris will
lead the Material Science Committee.
Upon completion of the transaction,
Liveris will become executive chair-
man of the newly formed DowDuPont
Board of Directors and Breen will be-
come CEO of DowDuPont. Both Liveris
and Breen will report to the Board of
Directors. DowDuPont’s board is ex-
pected to have 16 directors, consisting
of eight current DuPont directors and
eight current Dow directors.
Following the closing of the transaction,
DowDuPont will be dual headquartered in
Midland, MI and Wilmington, DE.
The merger transaction is expected to
close in the second half of 2016, subject
to customary closing conditions, including regulatory approvals, and approval by
both Dow and DuPont shareholders. 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. CW
DuPont, Dow to Combine in Merger of Equals
