The justice department approved the merger of Dow Chemical Company and DuPont late Thursday. Both companies say they have reached a proposed agreement with the Antitrust Division of the United States Department of Justice (DOJ). The department will permit the companies to proceed with their proposed merger of equals.
?We are very pleased that the DOJ has approved this transaction,? said Andrew Liveris, Dow?s chairman and chief executive officer. ?With today?s DOJ clearance, we have taken a significant step forward in bringing together these two iconic enterprises, and in the subsequent intended separation into three leading, independent innovation-based science companies that will generate significant benefits for all stakeholders.?
Ed Breen, chair and chief executive officer of DuPont, said, ?With this review completed, we are on track to close our procompetitive merger in a manner that maintains the strategic logic and value creation potential of the transaction. Going forward, the intended subsequent spin-offs are expected to unlock significant value for shareholders, as we execute our plan for each company to be a growth-oriented leader in attractive segments where global challenges are generating strong demand for their distinctive offerings.?
In connection with the proposed agreement and consistent with commitments already made to obtain the European Commission?s regulatory approval, DuPont will divest certain parts of its crop protection portfolio and Dow will divest its global Ethylene Acrylic Acid copolymers and ionomers business. The proposed agreement with the DOJ, which remains subject to court approval, does not require the companies to make any additional divestitures. With this agreement, no further approvals are required in the U.S. for the merger to close.
?I am pleased that the Justice Department listened to the concerns I raised with the Dow-DuPont transaction. I appreciate the department?s requirement that these companies divest portions of their businesses in order to maintain a more fair and open marketplace for America?s independent producers, farmers and consumers,” Senate Judiciary Committee Chairman Senator Chuck Grassley said.
Not everyone was happy about the approval though.
?The combination of Dow and DuPont, coupled with other pending mergers, leaves family farmers with less competition and choice in the seed and agrichemical sectors. This drives up costs for farmers? inputs, and it reduces the incentive for the remaining agricultural input giants to compete and innovate through research and development,” National Farmers Union President Roger Johnson said.
The companies reiterated that the merger transaction is expected to generate cost synergies of approximately $3 billion and growth synergies of approximately $1 billion.
To date, Dow and DuPont have obtained clearance in many jurisdictions, including approvals in the U.S., Europe, Brazil and China. The companies are working constructively with regulators in the remaining jurisdictions to obtain clearance for the merger and are making progress in fulfilling the requirements of the conditional approvals that have already been received.
The companies reaffirmed their expectation to close the merger in August 2017, with the intended spin-offs to occur within 18 months of closing.
