A new Number One: What the Dow-DuPont-Merger Means for Chemicals

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The spin-offs will include the leading global pure-play agriculture company with revenue of US $ 18 billion based on 2014 sales. The largest business will be a material science company with sales of US $51 billion, made up of Dow’s current franchise, excluding agriculture, and electronic materials, plus the addition of DuPont’s performance materials business, including engineering plastics and elastomers. The specialty products company, with revenues of US $12 billion, includes DuPont’s electronic and communications; nutrition and health; industrial biosciences; and safety protection business; plus Dow’s electronic materials business.

Not a Matter of Love?

Dow is currently the second or third biggest chemical maker by revenue, with sales of $58.2 billion in 2014. DuPont ranks eighth, with 2014 revenue of $24.7 billion. The two companies have each faced activist and investor pressure to consider more aggressive portfolio rationalization than they have undertaken to date. The companies had a combined market capitalization of approximately $130 billion at announcement.

DuPont looks back on a rather turbulent 2015, as long-time chairwoman Ellen Kullman (who had always opposed a merger of DuPont with another big chemical player) resigned from the company board.

Both Kullman and DuPont were often in the headlines due to the conflict between Kullman and New York finance investor Nelson Pelts regarding the future direction of the company. Pelts is one of the major shareholders of DuPont with his investment company Train Fund Management and demanded major cost reductions and demerger of the group. Kullman considered this proposal as very risky and costly.

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