Dow, DuPont win U.S. antitrust approval
Dow Chemical Co. and DuPont Co. on Thursday won U.S. antitrust approval for their $73 billion merger, overcoming one of the last remaining hurdles to a deal that would create a global chemicals giant.
The companies said that the assets they agreed to sell to win U.S. approval didn’t go beyond what they had already agreed to with other jurisdictions. DuPont will sell off some of its herbicide and insecticide products and Dow will unload a plastics packaging unit, according to a settlement filed in federal court in Washington.
Dow CEO Andrew Liveris emphasized recently that Dow’s Texas operations will see little effect from the merger. One of the three splintered companies, to be named Dow, would continue to own and run the Freeport complex, as well as DuPont’s facilities in Orange, near the Louisiana border.
Dow has expanded significantly along the Gulf Coast. The company is completing a $6 billion expansion along the Gulf Coast, including an ethane cracker, which turns ethane,
a natural gas liquid, into ethylene, a key component of plastics. The plant, completed in March, is expected to churn out 1.5 million metric tons of ethylene a year.
Last month, Dow Chemical said it was planning to spend $4 billion in further expansions in the Houston area, at its headquarters in Midland, Mich., and in Europe. DuPont is based in Wilmington, Del.
The so-called merger of equals is among a trio of mega-deals that would reshape the global agrochemicals industry if approved by regulators around the world. Bayer is seeking approval to buy Monsanto Co., while China National Chemical Corp.’s agreement to buy Syngenta is nearing completion. If cleared, the transactions together would consolidate the industry into four major players, including BASF.
The deals have drawn complaints from farmers and environmental activists who say the combined companies’ control of pesticide and seed markets might increase prices for farmers.
Europe’s approval
The U.S. approval of the Dow-DuPont tie-up follows the European Union’s clearance of the deal in March, when DuPont agreed to divest part of its pesticide business, including research and development. Brazil, China and India have approved the deal, while Canada’s decision is still pending. The companies said they “are working constructively” with regulators in the remaining jurisdictions.
The new company is to be called DowDuPont. Ed Breen, DuPont’s chairman and chief executive officer, will be CEO of the new company, while Liveris will be chairman.
The EU expressed concern that the combination would have halted work on new chemical products in areas where Dow and DuPont compete head to head. Officials found evidence that the pair would have cut back on the amount they spent on developing products. Only Bayer, BASF and Syngenta match the two firms in discovering, developing and selling agricultural chemicals.
Dow and DuPont said on March 31 that they were pushing back the expected closing of the deal, which they reached in 2015, to August after DuPont agreed to sell part of its pesticides business to FMC Corp. to satisfy competition regulators. That pending deal would make Philadelphiabased FMC the world’s fifth-biggest producer of crop-protection chemicals. South Korea-based SK Innovation Co. agreed to buy the Dow packaging unit in February.
Done by August?
The companies said Thursday that they still expected the deal to close in August.
Dow and DuPont are planning to split the merged company into three within 18 months of closing, with the first spinoff a materials-science company that will retain the Dow name. The other two post-split companies will focus on agriculture and specialty products.