Dow, DuPont attempt merger that would form $130B chemical colossus

DOVER, Del. -- Dow Chemical and the DuPont Co. announced Friday that they are merging in a $130 billion chemical industry megadeal.

See Full Article

The merger would combine two companies that sell agricultural products to millions of farmers around the world, and make a variety of chemicals for consumer and industrial products ranging from electronics, automobiles, and household goods to building materials and safety equipment.

The all-stock merger calls for the two companies to combine as DowDuPont, then separate into three independent publicly traded companies focused on agriculture, material science and specialty products.

"Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities," said Dow Chairman and CEO Andrew Liveris.

Liveris will be named executive chairman of the combined company while DuPont Chairman and CEO Edward Breen will be CEO. The company will have dual headquarters in Michigan and Delaware where the two companies are currently based.

In conjunction with the proposed merger, which is subject to regulatory approval, both companies are taking separate restructuring steps.

DuPont announced a companywide restructuring plan to reduce $700 million in costs that includes employee and contractor layoffs affecting about 10 per cent of the company's workforce. It expects to record a pretax charge of about $780 million, with approximately $650 million of employee separation costs and about $130 million of asset-related charges and contract terminations.

Dow, meanwhile, said it is taking full ownership of Dow Corning, currently a 50-50 joint venture between Dow and Corning. Dow said the move, expected to close in the first half of 2016, is expected to generate more than $1 billion in additional adjusted annual earnings and will increase its product offerings in the building and construction, consumer care, and automotive markets.

The companies said the proposed merger of equals, approved unanimously by their respective directors, will result in cost synergies of about $3 billion that are projected to create approximately $30 billion of market value.

Under the terms of the deal, Dow shareholders will receive a fixed exchange ratio of one share of DowDuPont for each Dow share, and DuPont shareholders will receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share. Dow and DuPont shareholders will own about 50 per cent, respectively, of the combined company.

The proposed agriculture business would unite DuPont's and Dow's seed and crop protection businesses. The material science company would combine DuPont's performance materials segment with Dow's performance plastics, performance materials and chemicals, infrastructure solutions, and consumer solutions units, excluding its electronic materials business. Combined pro forma 2014 revenue for material science was about $51 billion.

The specialty products company would combine DuPont's nutrition and health, industrial biosciences, safety and protection, and electronics and communications segments with Dow's electronic materials business. Combined pro forma 2014 revenue for specialty products was approximately $13 billion.

The new company's board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors.



Advertisements

Latest Economic News

  • Canadian agriculture ministers briefed on trade-war contingency plan

    Economic CTV News
    VANCOUVER -- Federal Agriculture Minister Lawrence MacAulay emphasized the importance of the provinces working together as an escalating trade war with the United States puts some farmers on edge. The minister said his provincial and territorial counterparts discussed trade negotiations and the contingency plan during their conference that wrapped up Friday in Vancouver. Source
  • Teamsters members at CP Rail ratify new contract

    Economic CBC News
    Unionized conductors and locomotive engineers at Canadian Pacific Railway Ltd. have voted in favour of a new four-year collective agreement. Members of the Teamsters Canada Rail Conference (TCRC), which represents about 3,000 workers at CP, voted 64.7 per cent to ratify the new contract. Source
  • Pipeline protesters say they're willing to defy eviction notice

    Economic CTV News
    BURNABY, B.C. - Protesters at an anti-pipeline camp in Burnaby, B.C., say they are ready to defy an eviction notice handed out from the city. The City of Burnaby issued a 72-hour notice to those occupying "Camp Cloud" on Wednesday, but protesters say in a news release that isn't enough time to comply with concerns raised over safety. Source
  • Japan resumes Canadian wheat imports after suspension

    Economic CBC News
    Ottawa says Japan has ended its temporary suspension of Canadian wheat imports. Japan had halted shipments after some unauthorized genetically modified wheat was found in southern Alberta. Ottawa says the decision marks an end to all international trade actions arising from the discovery on June 14. Source
  • Ottawa says Japan has resumed Canadian wheat imports after temporary suspension

    Economic CTV News
    Ottawa says Japan has ended its temporary suspension of Canadian wheat imports. Japan had halted shipments after some unauthorized genetically modified wheat was found in southern Alberta. Ottawa says the decision marks an end to all international trade actions arising from the discovery on June 14. Source
  • 'This is madness': Auto industry warns U.S. lawmakers of dire tariff consequences

    Economic CBC News
    The world's automotive industry gathered in Washington with uncharacteristic unity, to deliver a singular message to American policymakers: If you start a trade war with tariffs on cars, you'll shoot yourself in the foot. The issue that has been gaining steam for weeks came to a head Thursday as dozens of representatives from the industry around the world deliver their remarks at a hearing before the U.S. Source
  • Loonie moves up as inflation ticks higher, TSX ends lower along with U.S. markets

    Economic CTV News
    Stock indexes in Canada and the U.S. closed down Friday on geopolitical tensions, while the loonie surged higher after Statistics Canada said the inflation rate jumped in June. Data from June showed the country's annual inflation rate rose to 2.5 per cent for the month, up from a 2.2 per cent reading in May to hit its highest mark in more than six years. Source
  • Loonie moves up as inflation ticks higher, TSX moves lower at late-morning

    Economic CTV News
    TORONTO - The loonie surged higher after Statistics Canada reported the annual inflation rate in June hit its highest mark in more than six years, while Canada's main stock index lost ground. The Canadian dollar was trading at 76.16 cents US, up from an average value of 75.44 cents US on Thursday. Source
  • Aimia shares surge after it announced Aeroplan program changes in 2020

    Economic CTV News
    MONTREAL -- Aeroplan's parent company received its biggest boost since announcing a change in CEO in April after its shares surged more than eight per cent Friday after it unveiled changes to the loyalty program once its exclusive partnership with Air Canada ends in 2020. Source
  • Boost to Canada Child Benefit comes into effect

    Economic CTV News
    If you are eligible for the Canada Child Benefit program, your monthly payment could soon be increasing. Effective Friday, the federal tax break is being indexed to inflation, which means an increase to keep up with the growing cost of living. Source