BY Richard Summerfield
The controversial $130bn ‘merger of equals’ between Dow Chemical and DuPont finally won approval from the European Union (EU) yesterday as they agreed to divest certain assets in order to get the deal done.
The combined company, which will be known as DowDuPont following the proposed merger, will split into three independent companies within two years of completion. The three businesses will focus on agriculture, materials and speciality products.
"We always look at what a merger would change not just today but also tomorrow," EU Competition Commissioner Margrethe Vestager told reporters at a Brussels press conference announcing the approval. "It is just as important to make sure mergers don’t reduce innovation for new and better products."
In a statement following the approval, Dow and DuPont said: “Longer term, the intended three-way split is expected to unlock even greater value for shareholders and customers and more opportunity for employees as each company will be a leader in attractive segments where global challenges are driving demand for their distinctive offerings."
DuPont has agreed to sell off its crop protection business, along with its associated research and development division. Dow has agreed to divest its acid copolymers and ionomers business.
According to Ms Vestager, the choice of buyer for the companies’ assets was up to Dow and DuPont, however, a potential purchaser would need to have the necessary resources to make the new business viable without triggering new antitrust concerns.
EU antitrust authorities were initially reluctant to approve the deal as they were concerned that competition and innovation in the European agriculture industry would be negatively impacted.
Though the EU’s approval is an important step in the approval process, the deal is still being examined by antitrust bodies in the US, Canada and Brazil. "The companies continue to work constructively with regulators in the remaining relevant jurisdictions to obtain clearance for the merger, which they are confident will be achieved," the Dow and DuPont statement continued.