Dow Chemical and DuPont Are in Advanced Talks to Merge Deal could be announced in coming days; companies together
worth nearly $120 billion
Dow Chemical and DuPont are in advanced talks to merge. DuPont Chief Executive Edward Breen, left,
is expected to keep that title at the new company, and Dow Chemical CEO Andrew Liveris is expected to
be executive chairman. PHOTO: NATALIE KEYSSAR FOR THE WALL STREET JOURNAL (LEFT), JONATHAN
ERNST/REUTERS (RIGHT)
By DAVID BENOIT, DANA CIMILLUCA, DANA MATTIOLI and JACOB BUNGE
Updated Dec. 8, 2015 10:49 p.m. ET
Dow Chemical Co. and DuPont Co. are in advanced talks to merge, in what would be a
combination of two of America’s oldest companies that together are worth nearly $120 billion.
The chemical giants, which each have a market capitalization of about $60 billion, could
announce a merger in coming days, people familiar with the matter said. It would be followed by
a three-way breakup of the combined company, they said, a common approach to mergers and
acquisitions of late. Dow’s Chief Executive Andrew Liveris is expected to be executive chairman
of the new company, with DuPont CEO Edward Breen keeping that title.
Terms of the deal couldn’t be learned, but some of the people said it would be billed as a merger
of equals, meaning there wouldn’t be a big premium for either set of shareholders. A deal hasn’t
yet been inked and the talks could fall apart, the people cautioned.
Even if the two sides manage to agree, there is no guarantee antitrust regulators would bless the
union or that the breakup plan would address any such concerns. The merger would combine two
top suppliers of industrial and agricultural chemicals and crop seeds.
Should it come to fruition, a combination of the companies, each more than a century old, would
be one of the biggest in a year marked by big deals. So far, companies have struck some $4.35
trillion of takeovers in 2015, eclipsing 2007 as the top year on record for deals, according to
Dealogic.
Before any breakup, the deal would create a giant with more than $90 billion in combined sales
and strong positions in everything from
Under pressure from shareholders to slim down and focus on faster-growing units, both
companies have been restructuring their businesses by shedding some of the products that made
them famous.
The deal under discussion would ultimately accelerate that process, with the creation of separate
businesses housing the companies’ agricultural, materials and material sciences and specialtyproducts businesses, some of the people said.
A deal, should one be reached, would come as talks of consolidation in the agricultural-sciences
industry have heated up, with companies scrambling to adjust to pressure on lower prices for
their commodities.
Last month, The Wall Street Journal reported that DuPont was discussing a potential
combination of its agriculture division with seed giant Syngenta AG, and separately exploring a
potential agriculture deal with Dow. Monsanto Co. earlier this year abandoned a $46 billion bid
for Syngenta amid resistance from the Swiss company.
Dow’s Mr. Liveris has for more than a decade sought a deal with DuPont, and reached out to Mr.
Breen quickly after Mr. Breen took the top job at DuPont in October, some of the people said.
He pitched a deal as a way to find synergies before breaking up the businesses into more focused
operations, the people said.
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On the agricultural side of their businesses, analysts have long spoken of the merits of a
combination between Dow and DuPont. Together, the companies sell about 17% of the world’s
pesticides, and would be the third-largest supplier of crop chemicals, according to data compiled
by Morgan Stanley. Combined, they would hold 41% of the U.S. corn seed business and 38% of
the soybean market.
In addition to agricultural products, the companies also have divisions that make films, coatings,
packaging technologies and other materials used in the food, pharmaceutical, industrial and
automotive sectors. DuPont’s stable of goods includes Kevlar fibers and Corian countertops,
while Dow’s encompasses Styrofoam insulations and sunscreen chemicals.
Both companies are U.S. institutions. DuPont was started by a French gunpowder maker named
E.I. du Pont, who came to America in 1800 and broke ground on his first powder mills not long
after. Midland, Mich.-based Dow was founded by electrochemical pioneer Herbert Henry Dow
in 1897.
More recently, the two companies have looked to reshape their businesses to shed low-margin
assets, made from oil and petrochemicals, in favor of higher-margin specialty products. DuPont
has exited performance paints and coatings, including the business that invented Teflon nonstick
pan coating. Dow, meanwhile, has gotten out of selling materials like chlorine and the epoxy
used in everything from space travel to Ziploc bags.
The talks come just a month after Wilmington, Del.-based DuPont named Mr. Breen, a
turnaround expert, as the company’s chief executive after a stint as interim CEO. The company’s
prior CEO,Ellen Kullman, retired after fending off Nelson Peltz and Trian Fund Management
LP, which sought board seats and criticized the company—and its leadership—for bloated
corporate spending and a continued failure to hit earnings forecasts.
Trian ran a lengthy proxy fight that DuPont defeated, but DuPont’s stock price continued to sag
and is currently down nearly 10% for the year. Mr. Breen recently said the company was
weighing deals with rivals.
Last month, Mr. Liveris said his company is exploring deal possibilities for its agriculture
division, which had $7.3 billion in sales last year.
Dow has also had an activist investor. Last year, the company added two directors nominated
by Daniel Loeb’s Third Point LLC after Mr.Loeb sought a breakup of the company and
threatened a proxy fight. Dow’s stock is up 12% this year.
In March, Dow said it would spin off a significant portion of its chlorine business to chemicals
maker Olin Corp. And last year it said it would separate more of its commodity-based chemicals
business, looking to focus on higher-end specialty concoctions, in a move to create more stable
earnings. Since 2009, Dow has shed businesses responsible for $15 billion in annual revenues
and Mr. Liveris has suggested the changes are big enough that the company could even drop
“chemical” from its name.
A deal with DuPont would mark a high point for Mr. Liveris’s 11-year tenure at the top of the
company. While Dow was rocked by the financial crisis and a deal at that time that nearly sunk
the company, his strategy to realign the company’s products has returned the stock to near alltime highs.