With Dow Chemical and DuPont now officially a married couple, the two companies’ agriculture businesses are scheduled to clear out of the house within the next year and a half.
As per the terms of the merger-of-equals deal they first announced in late 2015, the two companies’ separate shares ceased trading in New York Thursday as their merger officially closed — and the new merged company, dubbed DowDuPont, began trading Friday.
The combined company said Friday it’s now working on the “future state operating models and organizational designs” for its three merged spinoff companies: agriculture, materials science and specialty products.
“Once each division has its own processes, people, assets, systems and licenses in place to operate independently from the parent company, DowDuPont intends to separate the divisions to stand within their own legal entities” — all of which are expected “within 18 months,” DowDuPont said in a release.
It added that it expects to reach “100 per cent run rate” on the cost synergies within 24 months of the merger’s closing.
DowDuPont overall will operate under DuPont chief executive Ed Breen as its CEO, while James Collins, Jr., DuPont’s executive vice-president for agriculture, will be chief operating officer for the merged firm’s ag division.
DowDuPont said Friday its plan calls for a merged, spun-off agriculture company to be headquartered in DuPont’s home town of Wilmington, Delaware, with “global business centres” at Johnston, Iowa, and Indianapolis, Indiana — the home bases for DuPont Pioneer and Dow AgroSciences respectively.
The overall merger, DowDuPont said, is expected to result in “run-rate cost synergies” of about $3 billion (all figures US$), with the potential for about $1 billion in “growth synergies.”
Agriculture assets set to be shed, to get antitrust regulators’ approvals for the merger, include DuPont’s Canadian cereal crop broadleaf and pre-seed burnoff herbicide portfolio; its PrecisionPac herbicide dispensing system; its experimental farm at Hanley, Sask.; and its packaging plant in Calgary.
As per a side deal reached in March this year, those assets, among others, are being sold to Philadelphia-based FMC Corp.
“We are extremely excited to complete this transformational merger and move forward to create three intended industry-leading, independent, publicly traded companies,” DowDuPont executive chairman and former Dow CEO Andrew Liveris said Friday.
The merger’s “true value,” he said, “lies in the intended creation of three industry powerhouses that will define their markets and drive growth for the benefit of all stakeholders,” referring to the expected agriculture, materials science and specialty products companies now under development.
“Our teams have been working for more than a year on integration planning, and — as of today — we will hit the ground running on executing those plans with an intention to complete the separations as quickly as possible.”
Farmers, among other customers, are expected to benefit from “superior solutions and expanded product offerings” by a combined firm that “will be able to respond faster and more effectively to rapidly changing conditions with innovative products and greater choice,” DowDuPont said.
DowDuPont said it envisions the merged agriculture business as “bring(ing) together the strengths of DuPont Pioneer, DuPont Crop Protection and Dow AgroSciences to better serve growers around the world with a superior portfolio of solutions, greater choice and competitive price for value.”
Their combined capabilities and “innovation engine” are expected to allow the ag business to bring a broader suite of products to the market faster, “so it can be an even better partner to growers, delivering innovation and helping them to increase their productivity and profitability.” — AGCanada.com Network