DowDuPont spin-off might create $19 billion ag company

by Jeff Gelski
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WILMINGTON, Del., and MIDLAND, Mich. — The Dow Chemical Co. and DuPont announced plans to merge on Dec. 11. At the same time, plans were announced to eventually spin off the merged company, DowDuPont, into three separate companies, including what could be the world’s leading production agriculture business. 

Edward Breen, DuPont
Ed Breen, chairman and CEO of DuPont

A Dec. 11 presentation showed the combined businesses in the planned agriculture company had 2014 net sales of $19 billion, ranking ahead of agriculture production revenues for Monsanto, Syngenta and Bayer. Monsanto had $16 billion in revenues for calendar year 2014, according to the presentation. Syngenta revenues of about $14 billion in 2014 reflected crop protection and seeds segments and excluded eliminations and the lawn and garden segment. Bayer agriculture production revenues of about $12 billion in 2014 excluded the environmental science segment.

“Simply put, we are creating the world’s leading agriculture company by bringing together DuPont’s unrivaled market access and industry-leading germplasm and breeding capabilities, and Dow strengths and traits and crop protection,” said Ed Breen, chairman and CEO of Wilmington-based DuPont, in a Dec. 11 call with analysts. “We will have the most complete portfolio of any ag company.”

Breen was asked if any divestitures were planned for either the seeds or the crop chemical parts of the portfolio.

“You’re probably asking maybe for antitrust reasons also, and it’s interesting,” Breen said. “It would be very limited where there’s product overlaps in almost all geographies. We’ve been through this. We’ve analyzed it in detail. So it would be very minor if there is any (overlap).”

The combined agriculture company would include DuPont Pioneer and Dow AgroSciences, LLC.

A separation of the merged company, DowDuPont, into three independent, publicly-traded companies could come 18 to 24 months following the closing of the merger. The three companies would be a global agriculture company, a specialty products company that would include DuPont Nutrition & Health, and a global material science company.

Businesses in the planned specialty products company had about $13 billion in revenue in 2014. Nutrition and health revenues accounted for $4 billion of the $13 billion. DuPont Nutrition & Health includes the Solae brand of soy-based ingredients and the Danisco brand of food ingredients.

Businesses in the planned material science company had 2014 revenues of about $51 billion.

“Each of the three businesses we create will be a leader in its industry, will be able to allocate capital more effectively, apply its powerful innovation more productively and expand its products and solutions to more customers worldwide,” Breen said. “Each company has a legacy and heritage of science and innovation, and they will have greater capacity to invest and target those resources as productively and effectively as possible.”

Advisory committees will be established for each of the three companies. Breen, who will become CEO of DowDuPont once the transaction is completed, will be responsible for the establishment, integration and operation of the agricultural products and specialty products companies. Andrew N. Liveris, currently chairman and CEO of Midland-based Dow, will be responsible for the establishment, integration and operation of the material science business. Liveris is scheduled to become executive chairman of the DowDuPont board of directors.

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