Dow-Dupont clears one of last merger hurdles
Dow Chemical Co. and DuPont Co. won U.S. antitrust approval for their $73 billion merger, overcoming one of the last remaining hurdles to a deal that would create a global chemicals giant.
The announcement set off local talk of what’s next for Midland, where Dow is headquartered since its founding in 1897.
“This merger will create more jobs not only for Midland but our region,” said Becky Church, vice president of operations with Midland Tomorrow, which is under the Midland Area Chamber of Commerce.
“We see great opportunity for businesses to prosper here because of the combined entities.”
A Dow spokeswoman could not immediately be reached for comment Thursday night about how Midland operations will be affected.
The companies said Thursday that the assets they agreed to sell to win U.S. approval didn’t go beyond what they had already agreed to with other jurisdictions. DuPont will sell off some of its herbicide and insecticide products and Dow will unload a plastics packaging unit, according to a settlement filed Thursday in federal court in Washington.
The so-called merger of equals is among a trio of mega-deals that would reshape the global agrochemicals industry if approved by regulators around the world. Bayer AG is seeking approval to buy Monsanto Co., while China National Chemical Corp.’s agreement to buy Syngenta AG is nearing completion. If cleared, the transactions together would consolidate the industry into four major players, including BASF SE.
The Dow-Dupont plan would break the merged company into three independent companies within 18 months of closing. The new company will have dual headquarters in Midland and Wilmington, Delaware. One of the break-out companies — the materials-science company — will retain the Dow name and be headquartered in Midland. The other two post-split companies will focus on agriculture and specialty products.
In a city where residents declare they “exist because of Dow,” the company’s roots run deep. Residents see the company’s affect on everything from philanthropy to schools, and some business owners link their success to support from the workers.
Dow employs more than 5,000 workers in Midland, including about 1,600 at its headquarters. It employs about 56,000 people worldwide.
Kent Holsing, president of United Steelworkers Local 12075, which represents an estimated 750 Dow Chemical Co. laborers in Michigan, said he doesn’t anticipate bargaining employees to face job cuts soon. However, concerns remain about what happens when the merged companies are split.
“There’s still a lot of apprehension because we don’t know exactly what that’s going to look like yet,” he said Thursday night. “I told the membership we’re not expecting any major changes to what we do today as a result of the (deal) close, but once they close, they’re going to start getting everything in place to spin off these companies. They will start to identify which employees will go where.”
Tim Nash, who directs Northwood University’s McNair Center for the Advancement of Free Enterprise and Entrepreneurship, said Dow long has supported Midland and “I don’t think we’re going to see major job loss. ... Midland can actually see a market that in the next five or six years could be larger than it is in terms of Dow’s economic impact.”
The deals have drawn complaints from farmers and environmental activists who say the the combined companies’ control of pesticide and seed markets might increase prices for farmers.
The U.S. approval of the Dow-DuPont tie-up follows the European Union’s clearance of the deal in March, when DuPont agreed to divest part of its pesticide business, including research and development. Brazil, China and India have approved the deal, while Canada’s decision is still pending. The companies said they “are working constructively” with regulators in the remaining jurisdictions.
The new company is to be called DowDuPont Inc. Ed Breen, DuPont’s chairman and chief executive officer, will be CEO of the new company, while Dow’s chairman and CEO, Andrew Liveris, will be chairman.
The EU expressed concern that the combination would have halted work on new chemical products in areas where Dow and DuPont compete head to head.
Officials found evidence that the pair would have cut back on the amount they spent on developing products. Only Bayer, BASF SE and Syngenta match the two firms in discovering, developing and selling agricultural chemicals.
Dow and DuPont said on March 31 that they were pushing back the expected closing of the deal, which they reached in 2015, to August after DuPont agreed to sell part of its pesticides business to FMC Corp. to satisfy competition regulators. That pending deal would make Philadelphia-based FMC the world’s fifth-biggest producer of crop-protection chemicals. South Korea-based SK Innovation Co. agreed to buy the Dow packaging unit in February.
The companies said Thursday that they still expected the deal to close in August.
Staff Writer Mark Hicks contributed to this report.