EU Clears Dow-DuPont Deal With Conditions -- Update
March 27 2017 - 10:30AM
Dow Jones News
By Natalia Drozdiak
BRUSSELS--The European Union's competition watchdog on Monday
cleared Dow Chemical Co. and DuPont Co.'s merger and are expected
soon to approve ChemChina's takeover of Syngenta AG, decisions that
will consolidate the agrochemical market just as Bayer AG and
Monsanto Co. gear up to notify EU regulators on their deal.
The European Commission on Monday gave Dow and DuPont a green
light for their deal on condition they sell parts of DuPont's
global pesticides business and associated research and development,
as well as Dow's acid copolymers and ionomers business.
China National Chemical Corp.'s planned acquisition of Swiss
seed and pesticide maker Syngenta AG is also heading for approval,
according to people familiar with the matter. The EU has until
April 12 to decide on that deal.
Bayer, meanwhile, has yet to kick off the formal EU review
process of its merger with Monsanto, though the companies have
already been in contact with EU regulators. They are expected to
formally register their deal with EU regulators in the second
quarter of this year.
As the last in the group of several large mergers in the sector,
that could make it tougher for Bayer and Monsanto to win clearance
without painful remedies, such as asset sales, given that the
market may already be more concentrated when the companies notify
their merger with regulators. Bayer and Monsanto didn't immediately
respond to requests for comment.
"The European Commission has always worked with the principle of
first come first served, which means that those who come later will
have to be measured against the market situation then having
developed from the mergers ahead of them," EU antitrust chief
Margrethe Vestager told reporters on Monday.
Ms. Vestager stressed, however, that the three deals were all
"very different, with different problems and raise different
concerns," despite being in the same agrochemical sector. She also
said the market was unlikely to develop much between decisions in
the first and second and then the third merger.
In the Dow and DuPont case, the EU was able to clear the deal
because the companies offered "significant commitments" to address
the regulator's concerns, Ms. Vestager said.
The Dow-DuPont merger, announced in December 2015, would create
a business with a combined market capitalization of roughly $120
billion, before splitting into three separate companies.
The EU said it initially had concerns the deal would reduce
competition on price and choice for pesticides and harm innovation
when it comes to improving existing products and developing new
active ingredients. But the commitments address those concerns in
full, the EU said.
"The companies believe the outcome of the European Commission
review is pro-competitive and maintains the strategic logic and
value creation potential of the transaction," Dow and DuPont said
in a joint statement.
Dow and DuPont are in negotiations to divest the remedies as a
whole package to a single buyer, according to people familiar with
the matter.
Ms. Vestager said the buyer of Dow and DuPont's assets would
have to fulfill several criteria. The buyer would have to be
independent from merging parties, it would need to have the
resources to make it a viable business and wouldn't create another
anticompetitive problem.
The companies are in close touch with the commission over the
execution of the remedies, the people said.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
March 27, 2017 10:15 ET (14:15 GMT)
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