Massive Merger: DuPont and Dow Agree to Terms

As news broke this morning of the agreed upon merger of Dow and DuPont, it sent ripples of questions across several industries as to the impact this combination of chemical giants will have.

It still seems unclear what the exact impact will be on the packaging industry, but it appears the intention is to eventually separate the merged company into three separate entities with a different focus.

What we know so far:

• The merger will result in a combined market capitalization of $130 billion.
• According to a joint press release, Dow and DuPont intend to separate into three separate, public companies.
  • The companies will consist of an “Agriculture Company,” “Material Science Company,” and “Specialty Products Company.
• It appears that all packaging business will be conducted within the Material Science Company.
• The Material Science Company will consist of DuPont’s Performance Materials segment and Dow’s Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions and Consumer Solutions segments.
• Advisory committees will be formed for each of the three businesses. Andrew Liveris, Dow’s chairman and CEO, will lead the Material Science Committee.

The merger, which the release states is expected to be complete in the second half of 2016, will result in a combined company called DowDuPont. Liveris will take the title of executive chairman of the DowDuPont board of directors. Edward Breen, DuPont’s chairman and CEO, will become the CEO of DowDuPont.

The release also states that after the transaction is complete, the company will be headquartered in both Midland, Michigan and Wilmington, Delaware, the current headquarter sites of Dow and DuPont, respectively.

On the packaging front, DuPont announced back in November that it would combine its Packaging & Industrial Polymers business with its Performance Polymers business.

In a presentation given to investors, Dow and DuPont stated that 70 percent of revenue in the Materials Science Company will be focused in three markets — packaging, transportation and construction. The companies explain that the merger will create a leader in thermoplastics, elastomers, finished parts and biopolymers, and result in the world’s largest packaging materials supplier.

Since the announcement of the merger, DuPont has announced a global cost savings and restructuring plan that it said in a press release will create a $700 million cost savings. According to the release, "the company expects to record a pre-tax charge to earnings of approximately $780 million, consisting of approximately $650 million of employee separation costs and about $130 million of asset-related charges and contract terminations. Approximately 10 percent of DuPont’s global workforce will be impacted."

Meanwhile, Dow announced in a press release that it will become the 100 percent owner of Dow Corning, which had been an evenly split venture between Dow and Corning. The press release states that this will allow Dow to increase its participation in consumer and infrastructure solutions by adding to its product offerings in areas like building and construction, consumer care and automotive.

Check back for updates to this article as they become available.