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R&D Concerns in Dow-DuPont Deal

Wednesday, February 8, 2017

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Innovation concerns are at the center of the regulatory review of The Dow Chemical Company’s multi-billion dollar bid to merge with DuPont, reports relate.

If the merger goes through, the U.S. based companies would unite to create DowDuPont, the world’s largest chemical company, with a combined market capitalization of approximately $130 billion.

Photos: Dow Chemical

Reports say the companies may sell off research and development capabilities in response to objections to the merger.

The Financial Times reported Sunday (Feb. 5) that the companies are “on the verge of offering to sell research and development capabilities” in response to concerns from the European Commission.

Innovation at Issue

The European anti-trust regulators who have been involved in a lengthy review of the deal are worried the merger will impede innovation spending across the crop protection market in general, the article relates, citing a 700-page objection document the Commission released in December.

Andrew Liveris

Andrew Liveris, CEO of Dow Chemical, will become the executive chairman of the planned DowDuPont company.

The innovation spending in this market could have effects across the global food chain, reports indicate.

The companies met with Commission officials in mid-January to make their case before a final decision is rendered, Bloomberg relates. The regulators have twice suspended review to seek additional information from the companies.

Remaining ‘Confident’

Andrew Liveris, Dow Chemicals’ CEO, said in a Jan. 26 earnings call that the company was “confident that we can get to the right answer that satisfies [the commission’s] innovation remedy requests,” the article noted.

Liveris believes the deal will close in the second quarter of 2017, anticipating that the U.S. and Chinese anti-trust authorities would give a green light to the transaction once European approval was received. Liveris would become the executive chairman of DowDuPont. Edward D. Breen, chair and CEO of DuPont, would become CEO of DowDuPont.

Should the merge follow the companies’ planned course, DowDuPont would breakup into three separate publicly traded chemical companies, specializing in different market sectors: agriculture, material science and specialty products.

The EU’s review is expected to conclude in the next month.


Tagged categories: Acquisitions; Business matters; Coating chemistry; Construction chemicals; Good Technical Practice; Government; Market; Market share; Mergers

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