Dupont and Dow signs
The new company, DowDuPont, in the future may split off into an agriculture company, a material science company and a specialty products company.

WILMINGTON, Del., and MIDLAND, Mich. – The Dow Chemical Co. and DuPont will combine in an all-stock merger of equals, according to a definitive agreement announced Dec. 11 by the boards of directors of both companies. The new company will be named DowDuPont and will have a combined market capitalization of about $130 billion.

A separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs could follow as soon as it is feasible, which is expected to be 18 to 24 months following the closing of the merger, subject to regulatory and board approval. The three companies would be a global agriculture company that would include DuPont Pioneer and Dow AgroSciences LLC, a specialty products company that would include DuPont Nutrition & Health, and a global material science company.

The transaction designed to create DowDuPont is expected to close in the second half of 2016. It is expected to deliver about $3 billion in cost synergies, with 100 percent of the run-rate cost synergies achieved in the first 24 months following the transaction’s closing. An additional upside of about $1 billion is expected from growth synergies.

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 about 50 percent of the combined company. The company will be headquartered in both Midland and Wilmington. 

Andrew Liveris, Dow
Andrew N. Liveris, chairman and CEO of Dow

“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,” said Andrew N. Liveris, chairman and CEO of Midland-based Dow.

Upon completion of the transaction, Liveris will become executive chairman of the DowDuPont board of directors. Edward D. Breen, chairman and CEO of Wilmington-based DuPont, will become CEO of DowDuPont. 

Edward Breen, DuPont
Edward D. Breen, chairman and CEO of DuPont

“This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies,” Breen said. “Longer term, the three-way split we intend to pursue 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.”

Besides DuPont Nutrition & Health, the planned specialty products company also would include DuPont’s Industrial Biosciences, Safety & Protection, and Electric & Communications as well as the Dow Electronic Materials business. Combined pro forma 2014 revenue for Specialty Products was about $13 billion. DuPont Nutrition & Health offers Solae brand soy-based ingredients and Danisco brand food ingredients. Also within DuPont Nutrition & Health, the BAX system and RiboPrinter system provide food diagnostics products.

The planned agriculture company would combine the seed and crop protection businesses of DuPont and Dow. Combined pro forma 2014 revenue for agriculture was about $19 billion. Dow AgroSciences LLC, Indianapolis, offers omega-9 fatty acid oils sourced from canola and sunflower. DuPont Pioneer, Johnston, Iowa, offers Plenish high-oleic soybeans used for the production of soybean oil that is free of partially hydrogenated oils and trans fat.

The material science company would consist 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. Combined pro forma 2014 revenue for Material Science was about $51 billion.