DuPont and The Dow Chemical Company will combine to form DowDuPont, which will subsequently pursue a separation of DowDuPont into three independent, publicly traded companies through tax-free spin-offs.
This would occur as soon as feasible, which is expected to be 18-24 months following the closing of the merger, subject to regulatory and board approval.
The companies will include a pure-play agriculture company; a material science company; and a technology and innovation-driven specialty products company.
Each business will have clear focus, an appropriate capital structure, a distinct and compelling investment thesis, scale advantages, and focused investments in innovation to deliver solutions and choices for customers.
“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” said Andrew N. Liveris, Dow’s chairman and CEO.
“This transaction is a major accelerator in Dow’s ongoing transformation, and through this we are creating significant value and three powerful new companies.”
Upon closing of the transaction, the combined company would be named DowDuPont and have a combined market capitalization of approximately US$130 billion at announcement.
Under the terms of the transaction, Dow shareholders will receive a fixed exchange ratio of 1.00 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.
Dow and DuPont shareholders will each own approximately 50% of the combined company, on a fully diluted basis, excluding preferred shares.
The transaction is expected to deliver approximately US$3 billion in cost synergies, with 100% of the run-rate cost synergies achieved within the first 24 months following the closing of the transaction.
Additional upside of approximately US$1 billion is expected from growth synergies.
