By Chris Clayton
DTN Ag Policy Editor
OMAHA (DTN) -- Chemical giants Dow Chemical Co. and DuPont are expected to officially complete their merger at the end of the stock market close Thursday as shares of the two companies stop trading on the New York Stock Exchange.
The merged $130 billion DowDuPont will officially start trading shares on Friday on the NYSE under the ticker symbol DWDP.
The big question that follows: How will DowDuPont proceed with at least three spinoff companies that are expected to happen within the next 18 months? After spending nearly two years to become one, DowDuPont will split off at least three separate companies for agriculture, material sciences and specialty products.
When the chemical companies announced the merger, they had $19 billion in combined agricultural sales: $11 billion from DuPont and $7 billion from Dow.
The agribusiness, which will feature the DuPont company name, will have its official corporate headquarters in Wilmington, Delaware, which is Dow's original headquarters. Johnston, Iowa, the base for DuPont Pioneer, and Indianapolis will serve as global business centers for most functions, including research and development, global supply chain, sales and marketing.
When the companies announced how DowDuPont would structure the agribusiness unit, the companies stated the structure would help DowDuPont achieve $1.3 billion in cost-saving "synergies" specifically from the ag division. All told, DowDuPont expects $3 billion in cost savings from the merger.
DowDuPont announced the structure of the agribusiness after the Iowa Economic Development Authority agreed to tax incentives to keep 250 to 500 research and development jobs in Johnston, Iowa. DuPont-Pioneer employs roughly 2,600 people in the Johnston facilities.
Dow-DuPont took a little longer to complete than the ChemChina purchase of Syngenta, but it's the second domino in the giant seed-and-chemical mergers as Bayer AG and Monsanto are also still in the regulatory approval process.
DowDuPont was forced to sell off some of its crop protection business to get regulatory approval in the European Union, but the companies stated last spring they were confident the agricultural division would retain a suite of crop-protection products. "The agriculture division will be well positioned to accelerate growth, levering strong pipelines in both seeds and chemistry to better serve growers," the companies stated at the time.
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
(AG/SK)
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