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June 21, 2017 02:00 AM

Dow, DuPont deal gets OK from Department of Justice

Frank Esposito
Senior Staff Reporter
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    The much-anticipated merger of Dow Chemical Co. and DuPont Co. cleared another hurdle on June 15, when the two firms announced they've reached a proposed agreement with the Antitrust Division of the U.S. Department of Justice that will allow the deal to proceed.

    The agreement will have little impact on the plastics businesses of Dow or DuPont. It calls for Wilmington, Del.-based DuPont to divest parts of its crop protection portfolio and for Midland, Mich.-based Dow to divest its global ethylene acrylic acid copolymers and ionomers business.

    With this agreement, no further approvals are required in the U.S. for the merger to close, officials said in a news release. The deal now is expected to close in August.

    "With today's DOJ clearance, we have taken a significant step forward in bringing together these two iconic enterprises," Dow Chairman and CEO Andrew Liveris said in the release. DuPont Chairman and CEO Ed Breen added that the two firms "are on track to close our pro-competitive merger in a manner that maintains the strategic logic and value creation potential of the transaction."

    The current plan calls for the combined DowDuPont to be split into three separate public companies, including one focused on materials, within 18 months after the merger becomes official. The merger transaction is expected to generate cost synergies of approximately $3 billion and growth synergies of approximately $1 billion.

    U.S. approval of the deal comes less than a month after investor Third Point LLC — a frequent Dow critic — proposed a new plan for that transaction. That plan would change the ultimate location of some businesses that include plastics after the merger. Specifically, it suggests that Dow's silicones business — formerly part of Dow Corning — and DuPont's Tyvek HomeWrap polyolefin film business instead be placed in the specialty products spinoff.

    Dow and DuPont responded with a joint statement that the boards of both Dow and DuPont earlier in May agreed to conduct a comprehensive review of the business composition of each division. "The two companies are fully aligned regarding the objective of the review," officials said. "We continually solicit and welcome input from our shareholders."

    Dow and DuPont posted combined sales of more than $72 billion in 2016. Both firms are major players in global plastics and chemicals markets.

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