On Dec. 11, Dow Chemical (DOW, Financial) and du Pont (DD, Financial) released a statement and held a media call following the final agreement by the two companies to merge. In the highly anticipated announcement the two companies reported that the merger would create an industrials conglomerate with a market value of $130 billion, resulting in $3 billion of cost synergies and provide for convenient distribution of shares to existing shareholders.
Plans for the deal do include spinoffs in 18 to 24 months that would result in three new publicly traded entities. The two companies appear optimistic about obtaining regulatory approval with an expected closing date in the second half of 2016.
In further details on the merger the two companies reported that the merger will result in a new entity named DowDuPont. Dow Chemical and du Pont shareholders will both exchange their current shares for shares of the new company with Dow Chemical shareholders receiving one share of DowDuPont per current share and du Pont shareholders receiving 1.282 shares of the new company in exchange for each of their current shares.
As previously reported, upon completion of the merger DowDuPont expects to divide the company into three separate entities focused on agriculture, materials and specialty products. The company will form three advisory committees to achieve the individual separations within the expected timeframe. Edward Breen, who will take over as CEO for the combined company, will lead the agriculture and specialty products committees. Andrew Liveris, who will be the newly appointed chairman of the DowDuPont board of directors, will lead the materials committee.
In an additional press release by du Pont the firm also disclosed plans for a restructuring that would further streamline costs. In 2016 du Pont plans to reduce expenses by $700 million. The restructuring will include numerous business consolidations and workforce reductions further exemplifying the challenges still ahead in the current business environment.
In an interview with CNBC following the merger announcement, Breen and Liveris discussed the value of the deal for shareholders.
Disclosure: I do not hold shares of any stocks mentioned in this article.
