Both chemical giants Dow Chemical Co. and DuPont Co. removed a big hurdle from their planned merger. Their deal estimated at 73 billion dollar has been approved by US antitrust authorities, reported Bloomberg.
US Department of Justice announced that it gave its approval for the deal on condition that the companies sell some divisions of herbicides and chemicals to protect competition. These sales were already announced by both parties and are under preparation.
The merger was announced back in December 2015 and initially it was expected to be completed in the first half of 2016 but was delayed several times due to US and foreign regulators.
Plans for the merger raised fears among farmers and environmental activists who believe that the combined control of pesticides and seed market could increase prices for farmers.
Approval by the US follows the “green light” by the European Commission in March after DuPont agreed to give up part of its activities in the field of pesticides, including research and development.
The concerns of the Commission, which launched antitrust proceedings deal in August last year, are associated with less price competition and choice of several market for pesticides. Commission considered that the merger could threaten the development of innovation in the future, because in the world there are only five players who were involved in research in the sector.
The commission said the commitments made by Dow and DuPont, resolved fully these concerns. On the one hand, Dow will part with assets in the petrochemical business, to maintain effective competition. The assets include two factories in Spain and the US, as well as a contract with a third party under which the company buys ionomer.
According to Reuters, Dow has already found a buyer for its assets – the South Korean SK Innovation.
Authorities in Brazil, China and India have approved the deal, while Canada’s decision is still pending. The companies said that it “work constructively” with regulators in other jurisdictions.
The new company will be called DowDuPont and has two plants – in Midland (Michigan) and Wilmington (Delaware).
Within 18 months after the merger DuPont and Dow plan split into three separate, publicly traded companies that are engaged in agriculture, materials and manufacture and sale of specialized products.
Roger Johnson, the president of the National Farmers Union, said the antitrust approval is “deeply disappointing.”
“Clearly, the Trump administration is content allowing our country’s consolidation complex to continue,” Johnson said in a statement. “The combination of Dow and DuPont, coupled with other pending mergers, … drives up costs for farmers’ inputs, and it reduces the incentive for the remaining agricultural input giants to compete.”
