New press releases made by Dow Chemical and the DuPont Co. have revealed their convergence worth US$ 130 billion. As per deal, both of the companies will sell out agricultural products to several farmers globally so that consumer/industrial chemicals could be obtained as a result ranging from automobiles, electronics, household goods etc.
The all-stock merger calls for the two companies to combine as DowDuPont, along with separating into three independent publicly traded companies focused on agriculture, material science and specialty products.
“Over the last decade our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities.”– Dow Chairman and CEO Andrew Liveris
As for the merged industry, Liveris will be appointed as new executive chairman while Chief Executive officer will be Edward Breen (the present Chairman of DuPont). The joint-board is expected to have 16 directors, consisting of eight current DuPont directors and eight current Dow directors. Furthermore, the united company will have twin headquarters in Michigan and Delaware – the current location of both the companies.
DuPont has made announcements regarding a company-wide restructuring plan to reduce approx. US$700 million in costs – comprising employee and contractor layoffs that affect almost 10% of the company’s workforce. Moreover, it expects to record a charge of around US$ 780 million with approximately US$ 650 million of employee separation costs and about US$ 130 million of asset-related charges and contract terminations.
On a similar notice, Dow stated to take full ownership of Dow Corning – presently half of them are owned by both. In first half of year 2016, the move is likely to get closed by generating approx. US$ 1 billion in additional adjusted annual earnings.
The cost synergies as per companies’ claims will result into US$ 3 billion that could initiate US$ 30 billion of market value. On overviewing shareholders, Dow shareholders will receive a fixed exchange ratio of one share of DowDuPont for each Dow share, and DuPont shareholders will receive a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share.
