September 18, 2017
Dow, DuPont close US$130B merger
The report said final required divestments will take place over the next 18 months from Sept. 1, while the larger combined company will split into three separate companies within the next two years. The three new companies include agriculture, material science and specialty products. The agriculture company is valued at $19 billion. The combined company will own nearly 40% of the corn and soybean seed market, according to 2016 data by KG Marketsense-the North American subsidiary of Kleffman Group.
Even if the US did not require Dow and DuPont to divest any of their seed businesses, they did divest some in other countries. This means, for now, that brands such as Mycogen, Pioneer and others sold by the companies will be under the same parent organisation.
Chemical divestments are underway to satisfy merger requirements. Thus, DuPont recently entered a definitive agreement with FMC for a portion of DuPont's Crop Protection business in exchange for cash and FMC's Health and Nutrition. Specifically, the acquisition includes insecticide portfolio Rynaxypyr, Cyazypyr and Indoxacarb; and herbicide portfolio that includes nine active ingredients and multiple formulated products for the cereal broadleaf herbicide market, including DuPont's PrecisionPac technology.
FMC will also acquire the global manufacturing network that supports these products. That includes four AI (artificial intelligence) manufacturing facilities and 10 regional formulation plants. DuPont will receive $1.2 billion in cash and $425 million in working capital, which satisfies DuPont's commitments to the European Commission.
Company representatives said the new agriculture company will be half germplasm and traits and half crop protection. Seed brands include Pioneer, Mycogen and Dow seeds and traits such as Enlist, Aquamax and Plenish. The crop protection business will offer insecticides, fungicides and herbicides.
The Dow-DuPont merger has been without opposition from affected entities. The US National Farmers Union, for example, earlier this year called on the Trump administration to block the merger, saying it would create the largest biotechnology and seed firm in the US and reduce competition.
"The reduction in competition that would be wrought by a Dow-DuPont merger will result in less innovation, higher prices, and less choice for farmers," NFU President Roger Johnson said in a letter to President Trump. "Given the damaging and lasting effects this merger will have on family farmers and rural America, we urge you to oppose this merger".
Johnson also noted that the Dow-DuPont merger occurs amidst a "massive wave" of consolidation in the agricultural inputs sector. "The combination of the two companies, coupled with the concurrently proposed mergers of Bayer-Monsanto and ChemChina-Syngenta, threatens to limit major players in the agrichemical and seed sectors to just four companies", he said.-Rick Alberto