Dow CEO: DuPont merger may be delayed to 2017
Dow Chemical Co.’s chief executive officer said the $59 billion merger with DuPont Co. may be delayed until February from a planned closing late this year, as European antitrust officials take more time to consider potential competition issues in pesticides and crop seeds.
Regulators’ “greatest concern is agriculture,” Dow’s Andrew Liveris said Monday in an interview with Bloomberg Editor-in-Chief John Micklethwait in New York. “One of the strongest lobbies in the world out there is the farm lobby, and in Europe, the agricultural sector is very, very critical to them, somewhat protected.”
Shareholders in the two largest U.S. chemical companies approved the 50-50 merger in June and Dow Chief Financial Officer Howard Ungerleider said in July that the merger was on track to close by the end of the year.
The European Commission this month delayed its decision deadline until Feb. 6 as it sought additional information about the transaction. Liveris said the value created by the deal made the wait worthwhile.
“That’s worth a few months of delay,” he said in the interview.
DuPont CEO Ed Breen on Tuesday said he now expects the deal to close by the end of March.
“We continue to work constructively with regulators in key jurisdictions to close the merger as soon as possible,” Breen said in the company’s third-quarter earnings statement. “In the event that regulators in those jurisdictions use their full allotted time, closing would be expected to occur in the first quarter of 2017.”
Liveris wouldn’t say whether the companies planned to sell assets to help win approval. Bloomberg reported this month that Dow is seeking a buyer for its copolymers business to ease regulators’ concerns. Likewise, DuPont is planning to sell an herbicides business, Bloomberg also reported.
Dow shares have gained 5.4 percent this year, narrowly edging the 5.3 percent increase in the Standard & Poor’s 500 Index. Like the S&P, DuPont has advanced 5.3 percent.
Liveris, 62, has spent four decades at Dow, including more than a decade as chairman and chief executive officer. He will become chairman of the combined company, DowDuPont Inc., and plans to step down after the deal goes through. Breen will serve as CEO.
The plan is to divide the merged company into three separate publicly traded entities, including an agriculture operation that would be larger than market leaders Monsanto Co. and Syngenta AG. Those two companies forged combinations of their own this year, with Monsanto agreeing to be acquired by Bayer AG and Syngenta striking a deal to be bought by China National Chemical Corp.
DuPont boosted its 2016 earnings outlook amid global cost cutting and increased sales volumes. Adjusted earnings for this year will reach $3.25 a share, compared with a prior range of $3.15 to $3.20, the Wilmington, Delaware-based company said in a statement. Analysts surveyed by Bloomberg were expecting $3.19 on average.
Breen is eliminating 10 percent of DuPont’s workforce as part of a plan to reduce annual expenses by $700 million. The savings, combined with a 3 percent higher sales volume, helped widen pretax profit margins in DuPont’s six business segments by an average of 3.5 percentage points, with gains realized in each one.
Dow will report financial results Thursday.
Liveris, a native of Australia, didn’t specify what he plans to do after retiring, but noted a keen interest in politics. He said the U.S. is not doing a good job selecting candidates and that business leaders with worldly experience could be valuable in the political arena.
“People like me should consider going and serving after they leave jobs like these,” said Liveris, while saying he didn’t necessarily plan to run for any office.