DuPont, Dow Chemical Agree To Combine In Merger Of Equals

(RTTNews) - EI DuPont De Nemours & Co. or DuPont (DD) and Dow Chemical Co. (DOW) Friday said their boards of directors have unanimously approved an agreement for an all-stock merger of equals. The combined company will be named DowDuPont. Dow and DuPont shareholders will each own approximately 50 percent of the combined company

Andrew Liveris, president, chairman and CEO of Dow, will be the executive chairman of DowDuPont, while Edward Breen, chairman and CEO of DuPont will be the CEO. DowDuPont will be dual headquartered in Midland, Michigan and Wilmington, Delaware.

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 receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share. Dow and DuPont shareholders will each own approximately 50 percent of the combined company, on a fully diluted basis, excluding preferred shares.

The companies said the combination will be highly synergetic and will result in a company with around $130 billion of market capitalization. The combination will result in market value of $30 billion, cost synergies will be approximately $3 billion and growth synergies will be around $1 billion.

Initially DuPont and Dow will merge its agriculture, material science and specialty products and subsequently pursue a tax-free spin-off into three independent, publicly traded companies in 18-24 months after closing of the merger.

Andrew Liveris, Dow's chairman and chief executive officer said, "This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders."

Edward Breen, chairman and chief executive officer of DuPont noted that the merger is a definitive leap forward on to higher growth and higher value. He added that in longer term, the three-way split 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 challenges are driving demand for these businesses' distinctive offerings.

After the spin-off of agriculture company, it will a global pure-play agriculture company that unites DuPont's and Dow's seed and crop protection businesses. The independent aterial science company also will be a pure-play industrial leader, consisting of DuPont's performance materials segment, as well as Dow's performance plastics, performance materials and chemicals, infrastructure solutions, and consumer solutions, excluding the Dow Electronic Materials business, operating segments.

The specialty products company after separation will be a technology driven innovative entity focused on unique businesses that share similar investment characteristics and specialty market focus. The businesses will include DuPont's Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business.

Both Liveris and Breen will report to the Board of Directors and the chief financial officer, when named will report to Breen. DowDuPont's board is expected to have 16 directors, eight current DuPont directors and eight current Dow directors.

The merger transaction is expected to close in the second half of 2016 and the subsequent separation of DowDuPont would be expected to occur 18 to 24 months following the closing of the merger.

In a separate announcement, DuPont said its 2016 global cost savings and restructuring plan will reduce $700 million in costs compared with 2015. About 10 percent of DuPont's global workforce will be impacted. These actions will result in a pre-tax charge to earnings of $780 million, consisting of $650 million of employee separation costs and $130 million of asset-related charges and contract terminations.

In the pre-market trading DD shares are down 4.08 %, while DOW is down 3.06%