European Commission clears Dow/DuPont merger, subject to conditions

By Jenny Eagle

- Last updated on GMT

Related tags European commission European union

DuPont produces herbicides for cereals. Picture: DuPont.
DuPont produces herbicides for cereals. Picture: DuPont.
The European Commission has approved the proposed merger between US-based chemical companies Dow and DuPont on condition of the divestiture of DuPont's pesticide business, including its R&D organization.

In a joint statement, the two companies said the merger​ is expected to close in August 2017, with ‘spin-offs’ within 18 months of closing.

Herbicides for cereals

Dow will also divest certain petrochemical products to preserve effective competition.

"Dow and DuPont are committed to maximizing the tremendous value creation potential of the merger and anticipated spins​," said Alexander Cutler, lead director, DuPont.

"Our review will provide an in-depth look at the portfolio mix and alignment across divisions to ensure we capitalize on all value-enhancing opportunities​.

The output of the review will be an immediate focus for the DowDuPont Board following merger close. If the results of our review demonstrate there is net greater long-term value creation to be realized through a change in the portfolio, it will be pursued​."

The parties will divest a significant part of DuPont's existing pesticide business, including: herbicides for cereals, oilseed rape, sunflower, rice and pasture and insecticides for chewing insect and sucking insect control for fruits and vegetables.

European Commission concerns

Significantly reducing competition in a number of markets for existing pesticides

Significantly reducing innovation competition for pesticides

Significantly reducing competition for certain petrochemical products.

Also, an exclusive license to DuPont's product for rice cultivation in the European Economic Area to address concerns relating to fungicides and DuPont's global R&D organization, with the exception of a few limited assets that support the part of DuPont's pesticide business, which is not being divested.

The decision was announced after the European Commission had concerns the merger would have reduced competition​ on price and choice in a number of markets for existing pesticides and reduced innovation to improve existing products and to develop new active ingredients.

Packaging and adhesives

"Pesticides are products that matter – to farmers, consumers and the environment,” ​said Margrethe Vestager, European Commissioner in charge of competition policy.

“We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment.

“Our decision ensures the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future."

It also had concerns due to the combined market shares of the two companies acid co-polymer market, where the number of competitors would be reduced from four to three and DuPont's dominant position in the ionomer market which is used in packaging and adhesive applications.

PIP_Nucrel_Brand_Content_630X315

Jeff Fettig, lead director, Dow, said both companies have undertaken significant preparation work in advance of the close.

"As a collective board we are committed to delivering maximum, long-term shareholder value by ensuring each of the intended companies will have clear focus, an appropriate capital structure, a distinct and compelling investment thesis, scale advantages, and focused investments in innovation to better deliver superior solutions and choices for customers​," he added.

In regards to the acid co-polymer market, Dow will divest two manufacturing facilities for acid co-polymers in Spain and the US and a contract with a third party through which it sources ionomers that it sells to its customers.

Related news

Show more

Related products

Enhance Food Safety with the Interceptor DF

Enhance Food Safety with the Interceptor DF

Content provided by Fortress Technology, Inc. | 04-Mar-2024 | Product Presentation

Tackling the unique challenges faced by confectionery manufacturers, the Interceptor DF metal detector surpasses all other systems on the market in identifying...

New Study: 2023 Productivity Benchmark Report

New Study: 2023 Productivity Benchmark Report

Content provided by QAD Redzone | 13-Oct-2023 | White Paper

On average, manufacturers in this QAD Redzone exclusive study achieved productivity increases that allowed them to make 5 days of product in just 4 days....

Follow us

Products

View more

Webinars