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DuPont/Dow Chemical – Megamerger valuing at USD 130 billion

USA • Chemical giants DuPont and Dow Chemical agreed to merge in an all-stock deal valuing the combined company at USD 130 billion, with plans to eventually split into three. The deal, which is likely to face intense regulatory scrutiny, allows the new company — to be called DowDuPont — to rejig assets based on the diverging fortunes of their businesses that make agriculture chemicals and plastics.

The combination will help the companies save about USD 3 billion in costs in the first two years, with the possibility of saving another USD 1 billion, Dow and DuPont said. The companies said the proposed split would create businesses focused on agriculture, materials and specialty products. Dow and DuPont shareholders will each own about 50% of DowDuPont, excluding preferred shares. DuPont Chief Executive Ed Breen will be CEO of DowDuPont, and Dow Chemical CEO Andrew Liveris will be executive chairman. DowDuPont’s board is expected to have 16 members, with each company contributing eight directors, the companies said.

The biggest of the three new companies by revenue would be a material science company, which would cater to the packaging, transportation and infrastructure industries. The combined revenue for the materials business was about $51 billion in 2014, on an adjusted basis. The companies said a new specialty products company would focus on electronics. The combined adjusted revenue of that business was about USD 13 billion in 2014. The third business, selling seed and crop protection chemicals, generated adjusted revenue of about USD 19 billion.

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Armin Karl Geiger

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