Dow, DuPont Outline Merger Game Plan

DuPont's Safety & Protection unit is going to be included in one of three independent, publicly traded companies that DowDuPont -- the combined company -- will create through tax-free spin-offs, assuming the merger is completed as the companies intend.

DuPont and Dow Chemical Company on Dec. 11 announced their merger plans, reporting that their boards of directors unanimously approved a definitive agreement under which the companies will combine in an all-stock, $130 billion "merger of equals." The important news for safety professionals is that DuPont's Safety & Protection unit is going to be included in one of three independent, publicly traded companies that DowDuPont -- the combined company -- will create through tax-free spin-offs, assuming the merger is completed as the companies intend. It would close "as soon as feasible, which is expected to be 18-24 months following the closing of the merger, subject to regulatory and board approval," they announced.

The three companies are:

  • Specialty Products Company, the one that will include DuPont's Safety & Protection, Nutrition & Health, Industrial Biosciences, and Electronics & Communications, as well as the Dow Electronic Materials business.
  • Agriculture Company, which combines DuPont's and Dow's seed and crop protection businesses.
  • Material Science Company consisting of DuPont's Performance Materials segment and Dow's Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions, and Consumer Solutions.

They announced Andrew N. Liveris, currently president, chairman, and CEO of Dow, will become executive chairman of the DowDuPont Board of Directors while Edward D. Breen, now chairman and CEO of DuPont, will become CEO of DowDuPont. The new company's chief financial officer will report to Breen, and DowDuPont will have a board of 16 directors -- eight current DuPont directors and eight current Dow directors. The company will be dual headquartered in the two cities where Dow and DuPont currently have their headquarters: Midland, Mich., and Wilmington, Del.

Liveris said the merger 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."

Breen, named to head DuPont earlier this year when then-CEO Ellen Kullman stepped down soon after shareholders rejected a proxy bid widely seen as a bid to break up DuPont, called it "an extraordinary opportunity to deliver long-term, sustainable shareholder value through the combination of two highly complementary global leaders and the creation of three strong, focused, industry-leading businesses. . . . For DuPont, this is a definitive leap forward on our path to higher growth and higher value. This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies. 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."

For DuPont's most recent quarter, the third quarter of 2015, the company reported operating earnings of 13 cents per share, down from 39 cents in the same quarter a year earlier. Safety & Protection's 3Q sales were down 15 percent to $813 million and operating earnings were down 20 percent to $156 million due to weakness in emerging markets and in oil & gas markets, the company announced Oct. 27.

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