A CHEMICAL TEST
DowDuPont faces stiff EU resistance: sources
The gigantic Dow Chemical-DuPont merger is experiencing some serious antitrust pushback in Europe and some Washington insiders feel it could get blocked, The Post has learned.
The two companies met last week with European Union regulators to detail their views as to why the deal should get approved.
A similar effort last year failed to resolve EU concerns. A decision is expected next month.
“I wouldn’t be surprised if it got blocked,” said one Washington source close to the situation, but not working on the deal, while a source close to the parties said he was “cautiously optimistic.”
A merger of Dow, with a $65 billion market cap, and DuPont, worth $64 billion, would create a new entity called DowDuPont, the world’s largest chemical company.
If the companies offer concessions — like selling of assets — they would need to do so by late January, the source said.
The biggest concern of the EU is that the new entity will spend less on crop-protection research and thus reduce global yields, sources said.
The merger, which will reorder and concentrate power in the biotech seed industry, has been the subject of intense scrutiny in the US, as well. At least 10 states and the Justice Department are weighing the deal.
Sen. Charles Grassley (RIowa), who heads the Judiciary Committee, held a hearing last September on the wave on consolidation in the sector that will affect five of the “Big Six” players in the seed and agrochemical business.
“I’m concerned that further concentration in the industry will reduce choice and raise the price of chemicals and seed for farmers, which ultimately will affect choice and costs for consumers,” the farm state lawmaker said.
Grassley appeared to raise a red flag on Jan. 10 during the confirmation hearing of Attorney General-nominee Jeff Sessions, who, if confirmed, will oversee Washington’s antitrust probe of the megadeal.
“Do I have your commit- ment that the Justice Department will . . . carefully scrutinize proposed agricultural mergers and acquisitions?” Grassley asked Sessions.
“I would be pleased to honor your request,” Sessions said.
Some observers regarded the exchange as a none-toosubtle test to see if Sessions would move to stop the merger.
The Justice Department is in the final stages of its review, the source said.
For their part, the companies insist the combined business presents little overlap and that they won’t reduce spending on research and development.
“What I’ve seen is they have offered to sell little bits and pieces of the seeds and cropprotection business” to allay antitrust concerns, the source close to the situation said.
Meanwhile, DuPont under Chief Executive Ed Breen, who took the helm in October 2015 two months before the merger was announced, is cutting costs to improve profits, an analyst close to the company said.
Neither party is subject to a break-up fee if regulators block the merger.
“We are continuing to work constructively with the European Commission and all other relevant regulatory authorities to address their questions and to obtain clearance for the merger,” the companies said in a joint statement.