Late Stage Merger between Dow Chemical and DuPont
The Dow Chemical Company and DuPont Company are two chemical companies who have been around for years. Dow Chemical Co. manufactures plastics, chemicals, and agricultural products. DuPont Co. has developed many polymers, environmentally friendly refrigerants, and synthetic paints. Although dealing with different chemicals, both companies are some of the top chemical companies in the entire world. It is no wonder after a combined total of over 300 years in business, these two companies are considering a merger.
Beginning talks of a merger
A merger between Dow Chemical Co. and DuPont Co. would be the chemical industry’s largest merger ever. It would be considered a mega-deal valued at about $120 billion. Both companies have had a tough year. DuPont’s former CEO Ellen Kullman won a proxy battle, when an investor, Trian Fund, conceded defeat in joining the DuPont board. Five months after her win, she resigned her position as CEO. Dow Chemical Co. CEO, Andrew Liveris, has had a year of pressure placed on him by an activist shareholder, while working on fixing the company’s financial crisis. Both companies have had to make tough decisions, but are still going strong, and a merger could place both companies back on top.
When will the merger take place?
Inside officials claim that a deal could possibly be announced by the end of the week. Because each company works with different chemicals, the merger would break up into three businesses, which include agriculture, specialty chemicals, and commodity chemicals. There is no telling whether a deal is 100 percent certain, as merger deals fall through all the time. Many stockholders are preparing for the merger, as shares of both companies have gone up in recent weeks.
Where will the company stand following a merger?
Since Dow Chemical Co. and DuPont Co. are two of the biggest names in the chemical industry, the merger would create room for the new company to become the world’s second largest chemical company, following behind BASF SE. The merger would also mean surpassing Monsanto Co. as the largest seed and pesticide company. With each company having market capitalizations of about $66 billion, both have been thinking about the option to expand on their agricultural-chemical businesses, which supply genetically modified seeds. The Dow and DuPont merger could then focus crop seeds and pesticides in their agricultural division of the company.
Industry professionals weigh in
Hassan Ahmed, who is an analyst at Alembic Global Advisors, believes that the merger would save the companies a total of $3 to $4 billion. Anu Agarwal, vice president at Argus Media in Singapore, has said that crude oil and feedstock prices have fallen, thus boosting profits for producers of petrochemicals. In merging Dow Chemical Co. and DuPont Co., it would allow for a large range of chemicals to the global market.
There are many who believe that this merger will only lead to layoffs and cutbacks, while others think it is a smart business move because it will create three categories that the company can focus on, individually. We are stuck waiting, but it shouldn’t be much longer before a final decision on a merger is made.
- Deals Profit
- December, 21, 2015
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