Dow-DuPont Merger: 5 Things You Should Know

Dow-DuPont Merger: 5 Things You Should Know

Dow and DuPont announced last week that the two companies will officially combine in an all-stock merger of equals.

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Dow chairman and CEO Andrew Liveris called the transaction “a game-changer for our industry” and the merger of equals “significantly enhances the growth profile of both companies.”

Here are five things to know about the deal:

  1. New name and market value. Upon closing of the transaction, the combined company would be named DowDuPont and have a combined market capitalization of approximately $130 billion at announcement. Under the terms of the transaction, Dow shareholders will receive a fixed exchange ratio of 1.00 share of DowDuPont for each Dow share, and DuPont shareholders will receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share. Dow and DuPont shareholders will each own approximately 50% of the combined company, on a fully diluted basis, excluding preferred shares.
  2. Company will split into three. It is the intention of both companies’ boards of directors that, following the merger, DowDuPont would pursue a tax-free separation into three independent, publicly traded companies with each targeting an investment grade credit rating. Each would be a strong, focused business with powerful innovation capabilities, enhanced global scale and product portfolios, focused capital allocation, and a distinct competitive position. The three businesses that the boards intend to separate are: Agriculture Company, Material Science Company, and Specialty Products Company.
  3. Dual corporate headquarters. Following the closing of the transaction, DowDuPont will be dual headquartered in Midland, MI, and Wilmington, DE.
  4. Management plan. Upon completion of the transaction, Liveris, President, Chairman and CEO of Dow, will become Executive Chairman of the newly formed DowDuPont Board of Directors and Edward Breen, Chair and CEO of DuPont, will become CEO of DowDuPont. In these roles, both Liveris and Breen will report to the Board of Directors. In addition, when named, the chief financial officer will report to Breen. DowDuPont’s board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors. The full list of directors will be announced prior to or in conjunction with the closing of the merger.
  5. Expected closing. The merger transaction is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals, and approval by both Dow and DuPont shareholders. The subsequent separation of DowDuPont, which the companies intend to pursue, would be expected to occur 18-24 months following the closing of the merger.