Dow and DuPont get serious about their proposed merger: This US $ 130 union of giants would create the world’s largest chemicals company, even dwarfing the likes of BASF. But the coming bememoth could lead a short life: The partners plan to split up the Dow-DuPont-portfolio into three independent companies...
Last week, Dow and DuPont confirmed rumors about a planned merger, which would combine the two US industrial and chemical icons in a $130 billion mega-merger. This union of giants is by far the biggest deal and transaction in chemicals ever, dwarfing even the industry’s largest deal to date, Azko Nobel’s 2008 acquisition of ICI for US $ 17 billion. The combined company shall be named DowDuPont with headquarters in both Midland, Michigan and Wilmington, Delaware.
This transaction is by no means an acquisition or takeover, the two companies say: Planned as a merger of equals, the combined market value of US $ 130 billion would make DowDuPont the biggest chemicals company in the world (far more than the current number one, BASF with roughly US $ 65 billion).
From Two to One to Three…
“This transaction is a game‐changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” said Andrew N. Liveris, Dow’s chairman and chief executive officer.
Following the transaction, the two partners companies intend to subsequently pursue a separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs within the next two years. This transaction could deliver approximately $3 billion in cost synergies, Dow and DuPont officials hope.
“Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities – requiring each company to exercise foresight, agility and focus on execution.
This transaction is a major accelerator in Dow’s ongoing transformation, and through this we are creating significant value and three powerful new companies. This merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers.”
On December 14th, the Dow Chemical Company’s Board of Directors, including Third Point’s two designated directors, announced its full and unanimous support of the announced merger with DuPont and intended separation.
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