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Review Proceeds on Dow-Dupont Merger

Tuesday, October 11, 2016

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The proposed merger between chemical giants The Dow Chemical Company and DuPont is moving forward again, as an investigation by European regulators reopens after missing paperwork caused a weeks-long delay.

According to the European Commission, charged with ensuring that the merger falls within European antitrust laws and other regulations, the review is proceeding once more, but may not be complete until next February, which would push back the two companies' proposed timeline for completion.

$130B Deal

The two chemical-industry giants announced last December that they plan to unite in a $130 billion merger-of-equals. The plan has since been subject to regulatory hurdles worldwide due to the global nature of both corporations’ business.

 DuPont CEO Edward Breen (left) and Dow CEO Andrew Liveris (right)
Photos: Dow and DuPont

The two chemical-industry giants announced last December that they plan to unite in a $130 billion merger-of-equals. Shown: DuPont CEO Edward Breen (left) and Dow CEO Andrew Liveris (right).

In early September, the European Commission announced it was suspending its Phase II review of the deal, because certain required paperwork had not been filed. A DuPont spokesman at the time called the matter “routine” and said it would not likely affect the merger timeline.

Review Reopens, Deadline Delayed

Last week, less than a month after the investigation was stopped, the EC announced that it was being reopened, as the companies had supplied the needed documentation.

The delay, though, could set back the closing of the merger.

Chemistry lab

Under the plan, Dow and DuPont would unite into one company, then split into three separate businesses: one focused on agricultural products, one on material science, and the third on specialty products.

The two companies had originally planned for the merger to be complete by the end of the 2016 calendar year. The EC, when it opened its investigation, set a deadline of Jan. 11 for its completion, casting doubt on the end-of-2016 timing. After the weekslong delay, the EC now plans to have the review completed by Feb. 6, 2017, according to reports.

The companies would still like to close in 2016.

“We remain focused on working with the European Commission toward closing the transaction by year-end 2016,” a Dow spokeswoman told The Wall Street Journal. “In the event that the commission utilizes the full allotted time, closing would be expected to occur in the early part of 2017.”

Agricultural Business Questioned

The part of the merger under closest scrutiny, according to reports, is the companies’ agricultural units, as the merger would reportedly create the world’s largest integrated crop protection and seed company. Last month, agribusiness giants Monsanto and Bayer AG also announced a merger proposal.

Under the merger plan, Dow and DuPont would unite into one company, DowDuPont, then later split into three separate, publicly traded businesses: one focused on agricultural products, one on material science (including performance materials and chemicals), and the third on specialty products.

Labor Leaders Meet

As the deal continues to undergo the expected regulatory scrutiny, union leadership is also preparing for what the merger may bring.

According to the Midland Daily News, labor leaders representing Dow and DuPont employees from around the U.S. met recently for a four-day conference to discuss the merger and its potential repercussions for workers, and open communication between the two companies’ workforces.

   

Tagged categories: Business matters; Coating chemistry; Dow Chemical Company; DuPont; Mergers; Regulations

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