Dow-DuPont merger may boost Asia

SINGAPORE: Dow Chemical and DuPont are to merge to create the world’s biggest chemical company.

The all-stock deal values the merged company at US$130 billion and the new group will be split into three separate entities: agriculture, specialty chemicals and materials, they said.

Following the merger, DuPont said it would cut staff by 10%.

Dow chief executive Andrew Liveris will become executive chairman of the new company, DowDuPont, while DuPont’s chief executive Ed Breen will be his CEO.

“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,” Mr Liveris said.

The statement added that the “highly synergistic transaction” was expected to produce run-rate cost synergies of around $3 billion and approximately $1 billion in growth synergies.

The merger could unleash a new force in Asia’s growing petrochemicals sector with combined regional sales of nearly $17 billion to compete in an industry dominated by Middle East and East Asian firms.

It could create a petrochemical business with research operations in top consumer China, manufacturing in the trading hub of Singapore and feedstock facilities in main export hubs Saudi Arabia and the US.

Such a combination would offer a challenge to Asia’s established players such as Japan’s Sumitomo Chemical, Taiwan’s Formosa Petrochemical Corporation and South Korea’s Lotte Chemical.

“Anyone who is in that realm could be a little bit daunted,” said Ee Foong Ewe, vicepresident for ICIS in Asia, an energy and petrochemical consultancy.

He said the merger would allow the firms to consolidate production and focus on growth areas in Asia.

Dow Chemical and DuPont have already benefited from the US shale boom that has provided cheap feedstock to allow them to produce petrochemicals more cheaply.

Asia-Pacific is the second-smallest region for the companies.