Clearing another regulatory hurdle for their merger, DuPont Co. (DD, Financial) and Dow Chemical Co. (DOW, Financial) announced Monday they had received conditional regulatory approval from the European Commission.
First announced in December 2015, the Dow-DuPont deal will be an all-stock merger of equals. The combined company will be called DowDuPont and will later be split into three independent companies.
The commission voiced concern the deal would reduce competition on price and choice for pesticides as well as impact innovation in improving existing products. To address these concerns, the two parties have agreed to divest parts of DuPont’s global pesticide business and Dow’s acid copolymers and ionomers business.
Headquartered in Wilmington, Delaware, DuPont has a market cap of $69.04 billion; its shares were trading around $79.85 on Monday with a price-earnings (P/E) ratio of 28.02, a forward P/E of 21.5, a price-book (P/B) ratio of 7.1 and a price-sales (P/S) ratio of 2.7.
Barrow, Hanley, Mewhinney & Strauss is DuPont’s largest guru shareholder with 0.93% of its outstanding shares. In all, 17 gurus hold the stock.
Based in Midland, Michigan, Dow has a market cap of $76.8 billion; its shares were trading around $63.31 on Moday with a P/E ratio of 18.8, a forward P/E ratio of 15.02, a P/B ratio of 2.7 and a P/S ratio of 1.5.
Andreas Halvorsen (Trades, Portfolio) is Dow’s largest guru shareholder with 1.6% of outstanding shares. In all, 18 gurus own the stock.
The union of the two companies will create a business with a combined market cap of $130 billion and is expected to generate run-rate cost synergies of approximately $3 billion and an additional $1 billion in growth synergies.
Disclosure: I do not own any stocks mentioned in the article.
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