DowDuPont recently announced that it will alter its original plan to break into three independent companies.
The company said that its Board of
Directors and management, with the assistance of independent advisors, completed a comprehensive review of the
portfolio composition of the intended
companies: Agriculture, Materials Science
and Specialty Products.
The board concluded “that, in light
of knowledge gained since the announce-
ment of the transaction, certain targeted
adjustments will be made between the
Materials Science and Specialty Products
divisions, which will enhance the compet-
itive advantages of the intended resulting
companies,”the company said in a press
release. “The changes better align these
businesses with the end-markets they
serve, ensuring clear focus, market vis-
ibility, targeted innovation and stronger
growth profiles, and better equip each to
compete successfully as industry leaders.”
McKinsey & Company; a comprehen-
sive business and operational analysis
leveraging knowledge gained over the
past 20 months of pre-merger planning;
and input from a wide range of stake-
holders, including both investors and
financial advisors.”
As a result, DowDuPont said it will
realign the following businesses to
the Specialty Products Division from
the Materials Science Division: Dow’s
Automotive Systems’ adhesives and flu-
ids platforms; Dow’s Building Solutions
business; Dow’s Water and Process
Solutions business; Dow’s Pharma and
Food Solutions business;
Dow’s Microbial Control business;
DuPont’s Performance Polymers business;
Several silicones-based businesses aligned
with applications in industrial LED, semiconductors, medical, as well as Molykote
brand lubricants for automotive and
industrial equipment and Multibase
Inc,which provides solutions for the thermoplastic compounding industry.
DowDuPont said that on a forecasted
2017 basis, the businesses that will be realigned to the Specialty Products Division
account for a total net sales of more
than $8 billion and operating EBITDA
of approximately $2.4 billion (Including
roughly 40 percent of the heritage Dow
Corning EBITDA.)
Relative to the original merger agreement, the adjustments, per DowDupont,
are as follows: Approximately $4 billion
of net sales from the heritage Dow portfolio evenly split between the Consumer
Solutions and Infrastructure Solutions
segments; Approximately $4 billion
of net sales from the heritage DuPont
Performance Polymers business moving
to the Specialty Products Division.
“Our DowDuPont Board is fully
aligned and confident that these targeted
portfolio adjustments are the right actions
to take and will benefit all stakeholders
over the long term,” said Andrew Liveris,
executive chairman of DowDuPont.
“They bear out the clear results of a significant comprehensive analysis the Dow
and DuPont boards undertook over the
past many months, which benefited from
a fresh look provided by independent,
third-party external advisors, in particular McKinsey & Company. We built on
the wealth of knowledge gained as both
companies advanced our integration
work together.
“These adjustments are also fully sup-
ported by the Materials Science Advisory
Committee, as they better align select
businesses with the market verticals they
serve, while maintaining integration and
innovation strengths within strategic
value chains,”he continued. “As a result,
both our Materials Science and Specialty
Products divisions will be well-positioned
to better anticipate and meet customer
needs through focused innovation and
technology development that will deliver
accelerated growth from a broader suite
of best-in-class products.”
Added DowDuPont CEO Ed Breen:
“The changes we are making will en-
hance the competitive advantages and
value creation potential of DowDuPont
and ensure that the intended companies
have the best possible foundation to drive
long-term value for all stakeholders.
“The facts clearly supported the strategic
logic of this portfolio configuration,”he
said. “Each of the intended companies
will have even stronger competitive positioning, high value-added customer
solutions, and a distinct and compelling
investment thesis, while maximizing opportunities for strategic growth and synergies. With clear focus, each will serve
attractive and growing markets, investing
in innovation and delivering greater returns for shareholders.”
DowDuPont said it still plans to
achieve run-rate cost synergies of approximately $3 billion and approximately $1
billion in growth synergies.
Following the portfolio realign-
ments, the three intended companies of
DowDuPont are, the company noted,
as follows:
A leading Agriculture Company that
brings together the strengths of DuPont
Pioneer, DuPont Crop Protection and
Dow AgroSciences to better serve grow-
ers around the world with a superior
portfolio of solutions – seeds, traits, crop
chemicals, seed treatment, agronomy and
digital services – ensuring greater choice
and competitive price for value. The
combined capabilities and highly pro-
ductive innovation engine will enable the
Dow, DuPont Alter Post-Merger Plans
