Dow And DuPont Win Antitrust Approval From U.S. Regulators

DuPont (DD.N) and Dow Chemical (DOW.N) have won U.S. antitrust approval to merge, according to a recently submitted court filing in the U.S. District Court for the District of Columbia. The all-stock merger was valued at $130 billion. The deal was originally announced in December 2015.

The approval was given on the condition that the companies sell certain crop protection products and other assets. The assets to be sold include DuPont’s Finesse herbicide for winter wheat and Rynaxypyr insecticides. Those two assets had U.S. annual sales of more than $100 million, according to the Justice Department. Dow will also sell its U.S. acid copolymers and ionomers business.

The Justice Department said the asset sales required would be sufficient to prevent price hikes or lost innovation. Acting Assistant Attorney General Andrew Finch said in a statement, “As originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various specialty crops.” Finch added that the agreement “will preserve vigorous competition.”

The conditions are similar to what the companies had agreed to in a deal struck with European regulators in March. Dow and DuPont have also received clearance to merge from China and Brazil. They are now awaiting approval from Canada, Mexico and a handful of other countries. The companies said they “are working constructively” with regulators in the remaining jurisdictions.

The new company created by the merger is to be called DowDuPont Inc. and will have dual headquarters in Midland, Michigan and Wilmington, Delaware. Dow currently employs more than 5,000 workers in Midland, including about 1,600 at its headquarters. The combined company will be headed by DuPont’s chairman and chief executive officer Ed Breen with Dow’s chairman and CEO, Andrew Liveris, acting as chairman.

After the merger, the companies plan to split into three separate companies specializing in specialty products, material sciences, and seeds and agrochemicals. The materials-science company would retain the Dow name and be headquartered in Midland. The split would occur within 18 months of the closing of the deal.

The approval by U.S. antitrust enforcers was quickly denounced by the head of the National Farmers Union, Roger Johnson, who called the decision “deeply disappointing.” Johnson said in a statement that these types of mergers “drives up costs for farmers’ inputs,” and “reduces the incentive for the remaining agricultural input giants to compete.” The deal has also drawn complaints from environmental activists.

The Justice Department and Federal Trade Commission have reviewed or are reviewing four deals involving mergers between corporate giants that supply U.S. farmers. In addition to the Dow-DuPont deal, ChemChina is purchasing Syngenta, Bayer is trying to buy Monsanto, and a merger is planned between Potash Corp and Agrium.


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