Dow, DuPont Announce Merger, Will Spin Into Three Publicly Traded Companies

Dow Chemical and DuPont were engaged in merger talks earlier this week with an official announcement expected to come shortly after. On Friday, the two companies

and announced an all-stock merger of equals. The new entity will be named DowDuPont which will be separated into three independent, publicly traded companies via a tax-free spin-off. Dow Chemical and DuPont said in a press release it will create three "highly focused leading businesses" in agriculture, material science, and specialy products. The companies added the "highly synergistic" transaction will create a run-rate cost synergies of around $3 billion and create approximately $30 billion of market value.

The companies added that each business will have: 1) a "clear" focus, 2) an appropriate capital structure, 3) a distinct and compelling investment thesis, scale advantages, and focused investments in innovation. The expected split will occur as "soon as feasible," which is expected to be 18 to 24 months after the closing of the merger which remains subject to the necessary regulatory approvals. "This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders," said Andrew N. Liveris, Dow's chairman and chief executive officer. "Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities – requiring each company to exercise foresight, agility and focus on execution. This transaction is a major accelerator in Dow's ongoing transformation, and through this we are creating significant value and three powerful new companies. This merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers." "This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the combination of two highly complementary global leaders and the creation of three strong, focused, industry-leading businesses. Each of these businesses will be able to allocate capital more effectively, apply its powerful innovation more productively, and extend its value-added products and solutions to more customers worldwide," said Edward D. Breen, chairman and chief executive officer of DuPont. "For DuPont, this is a definitive leap forward on our path to higher growth and higher value. This merger of equals will create significant near-term value through substantial cost synergies and additional upside from growth synergies. Longer term, the three-way split we intend to pursue is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each business will be a leader in attractive segments where global challenges are driving demand for these businesses' distinctive offerings."