MIDLAND, MI & WILMINGTON, DE— DowDuPont announced the successful completion of the merger of equals between The Dow Chemical Company (“Dow”) and E.I. du Pont de Nemours & Company (“DuPont”), effective Aug. 31. The combined entity is operating as a holding company under the name “DowDuPont” with three divisions—Agriculture, Materials Science and Specialty Products.
Shares of DuPont and Dow ceased trading at the close of the New York Stock Exchange on Aug. 31. Beginning Sept. 1, DowDuPont started trading on the New York Stock Exchange under the stock ticker symbol “DWDP.” Pursuant to the merger agreement, Dow shareholders received a fixed exchange ratio of 1.00 share of DowDuPont for each Dow share, and DuPont shareholders received a fixed exchange ratio of 1.282 shares of DowDuPont for each DuPont share.
Following the merger, DowDuPont announced that its Board of Directors and management, with the assistance of independent advisors, have completed their comprehensive review of the portfolio composition of the three intended independent companies. The Board unanimously concluded that, in light of knowledge gained since the announcement of the transaction, certain targeted adjustments will be made between the Materials Science and Specialty Products divisions, which will enhance the competitive advantages of the intended resulting companies. The changes are meant to better align these businesses with the end-markets they serve, ensuring clear focus, market visibility, targeted innovation and stronger growth profiles, and better equip each to compete successfully as industry leaders.
The DowDuPont Board of Directors approved the changes based on a thorough review led by the lead independent directors, which included recommendations provided by McKinsey & Company; a comprehensive business and operational analysis leveraging knowledge gained over the past 20 months of pre-merger planning; and input from a wide range of stakeholders, including both investors and financial advisors. As a result of this comprehensive analysis, DowDuPont will realign the following businesses to the Specialty Products Division from the Materials Science Division:
- Dow’s Automotive Systems’ adhesives and fluids platforms
- Dow’s Building Solutions business
- Dow’s Water and Process Solutions business
- Dow’s Pharma and Food Solutions business
- Dow’s Microbial Control business
- DuPont’s Performance Polymers business
- Several silicones-based businesses aligned with applications in industrial LED, semiconductors, medical, as well as Molykote® brand lubricants for automotive and industrial equipment and Multibase Inc, which provides solutions for the thermoplastic compounding industry
On a forecasted 2017 basis, the businesses that will be realigned to the Specialty Products Division account for total net sales of more than $8 billion and operating EBITDA of approximately $2.4 billion, including approximately 40 percent of the heritage Dow Corning EBITDA. Relative to the original merger agreement, the adjustments are as follows:
- Approximately $4 billion of net sales from the heritage Dow portfolio, evenly split between the Consumer Solutions and Infrastructure Solutions segments
- Approximately $4 billion of net sales from the heritage DuPont Performance Polymers business moving to the Specialty Products Division
“Our DowDuPont Board is fully aligned and confident that these targeted portfolio adjustments are the right actions to take and will benefit all stakeholders over the long term,” said Andrew Liveris, executive chairman of DowDuPont. “They bear out the clear results of a significant comprehensive analysis the Dow and DuPont boards undertook over the past many months, which benefited from a fresh look provided by independent, third-party external advisors, in particular McKinsey & Company. We built on the wealth of knowledge gained as both companies advanced our integration work together. These adjustments are also fully supported by the Materials Science Advisory Committee, as they better align select businesses with the market verticals they serve, while maintaining integration and innovation strengths within strategic value chains. As a result, both our Materials Science and Specialty Products divisions will be well-positioned to better anticipate and meet customer needs through focused innovation and technology development that will deliver accelerated growth from a broader suite of best-in-class products.”
“The changes we are making will enhance the competitive advantages and value creation potential of DowDuPont and ensure that the intended companies have the best possible foundation to drive long-term value for all stakeholders,” said Ed Breen, chief executive officer of DowDuPont. “The facts clearly supported the strategic logic of this portfolio configuration. Each of the intended companies will have even stronger competitive positioning, high value-added customer solutions, and a distinct and compelling investment thesis, while maximizing opportunities for strategic growth and synergies. With clear focus, each will serve attractive and growing markets, investing in innovation and delivering greater returns for shareholders.”
Following the portfolio realignments, the three intended companies of DowDuPont are a leading agriculture company that will be headquartered in Wilmington, DE, with global business centers in Johnston, IA, and Indianapolis, IN; a leading materials science company that will maintain the Dow™ brand and will be headquartered in Midland, MI; and a leading specialty products company that will be headquartered in Wilmington, DE.
The company discussed the results of its review and the path forward during a live webcast call. For more details, view the slide presentation that accompanied the conference call, as well as the webcast, on the DowDuPont Investor Relations events and presentations page.