DuPont, Dow Chemical Merger to Close in First Quarter 2017
October 25 2016 - 12:06PM
Dow Jones News
By Jacob Bunge
DuPont Co.'s merger with Dow Chemical Co. now appears likely to
complete in the first quarter of 2017, later than initially hoped,
as antitrust authorities scrutinize a spate of agricultural deals,
DuPont's top executive said.
The additional time enables the companies to plan for a faster
three-way split following the deal. "That's how I'm looking at it,"
said DuPont Chief Executive Ed Breen said on a conference call
discussing the company's third-quarter results.
Dow and DuPont, which previously aimed to close the megadeal by
the end of this year, are deep into discussions with antitrust
enforcers in the U.S., Europe, Brazil and China. The companies aim
to unite their vast portfolios of chemical fibers, crop seeds,
building materials and electronic components to create an
industrial behemoth worth about $122 billion.
After that, DowDuPont would break up into companies focused on
agriculture, materials, and specialty products like enzymes and
electronic components.
That deal, among the biggest struck in 2015, is among a wave of
mergers that would reorder the $100 billion global market in seeds
and pesticides.
Upon sealing their deal, DuPont and Dow now expect to be able to
split the combined entity into three separate companies within 18
months, versus the 18 to 24-month range projected when the deal was
announced, Mr. Breen said.
"The luxury of having this time now is that we can actually do a
lot of the work, the carve-work and other things, for the
separation now," Mr. Breen said.
The European Commission opened an in-depth probe of the deal in
August, and last month suspended its deadline for reviewing the
Dow-DuPont merger as it awaited further information from the
companies. The EU resumed its review this month, setting a new date
of Feb. 6, 2017 to complete the investigation.
Mr. Breen said merger reviews in other major countries where Dow
and DuPont do business, including the U.S., Brazil and China, are
roughly on pace with the European review.
Dow and DuPont have said overlap between their businesses is
relatively limited, given their respective scopes.
As DuPont closes in on the one-year anniversary of its December
2015 deal agreement with Dow, executives said DuPont's cost-cutting
efforts are paying off, and improving performance in some of its
business units prompted the company to boost profit projections for
the year. DuPont said Tuesday it now expects $3.25 a share in
adjusted earnings this year, compared with its prior guidance range
of $3.15 to $3.20.
In the September quarter, DuPont's agriculture sales rose 2% to
$1.12 billion, as Brazilian farmers stepped up purchases of new
DuPont seeds. Cost cuts, higher volumes and a $28 million benefit
from currency helped offset lower local prices and higher product
costs.
In the performance materials unit, sales also increased, lifted
by growth in building materials and the Chinese auto market.
Over all, DuPont earned $2 million, compared with $235 million a
year ago. On a per-share basis, the company broke even in the
quarter, compared with a 26 cent-a-share profit in the year-earlier
period.
Excluding certain items, the company earned 34 cents a share, up
from 13 cents a year ago. Analysts surveyed by Thomson Reuters had
forecast 21 cents a share.
Shares of DuPont were down 42 cents at $69.72.
--Joshua Jamerson contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
October 25, 2016 11:51 ET (15:51 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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