24th January 2019

DOW-DUPONT MERGER REVIEW HITS SNAG

The proposed $130-billion merger between the Dow Chemical Co. and DuPont has hit a snag in Europe, where the review of the deal is being paused. Regulators at the European Commission are asking for more information from the two companies, though what that might be has not been publicly stated.

When the deal was announced in July, the companies forecast completion by the second half of 2016, if US and other antitrust regulatory commissioners approved the deal. This timeframe switched to early 2017 when the EC announced a revised review deadline of January 11. With the postponement of the investigation, the review deadline will likely be pushed back further.

DuPont sources have indicated the matter is a matter of producing documents could be managed quickly. However, a US Senate committee is also looking into the fusing of the two chemicals giants, and there are separate enquiries in both Canada and Brazil.

It is understood the primary areas of concern are not in the coatings area, but in the agricultural side of the conjoined businesses. The intent, following completion of the merger is to split the company into three, one handling materials science, one handling agriculture, and one looking after what is being called specialty products. The fact that the result would be to create the world's largest integrated crop protection and seeds company, even bigger than the recently announced purchase of Monsanto by Bayer, is the key area of regulatory interest.

That said, the European Commission has also stated that “it would also create a leading integrated producer of certain petrochemical products that are widely used in packaging and adhesive applications. The transaction would take place in industries that are already globally concentrated.”

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