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from the better-living-through-chemicals dept.
Dow Chemical Company and DuPont have agreed to merge into an entity named DowDuPont, before splitting into three distinct companies organized by market segment:
The two largest chemical companies in America will become one entity named DowDuPont, as Dow Chemical and DuPont say they're joining in a "merger of equals." The new company will have a market capitalization of around $130 billion. After the merger, the resulting behemoth would be split into what Dow Chairman and CEO Andrew Liveris calls "three powerful new companies," with a combined revenue of around $83 billion.
Now that the two companies' boards of directors have agreed to terms, their shareholders will also need to affirm the merger. Terms of the agreement state that Dow shareholders will get 1 share of the new enterprise for each Dow share they own, while DuPont shareholders will get 1.28 shares. They will own about 50 percent of the new enterprise.
The massive deal also will need the approval of federal regulators. The deal is expected to close in the second half of 2016, with the segmentation taking place up to two years later. The three corporations will have distinct identities, according to a news release announcing the merger. Here's a list of relevant quotes, along with the projected revenue for each proposed company:
- Agriculture: "Leading global pure-play agriculture company that unites DuPont's and Dow's seed and crop protection businesses." Revenue: $19 billion.
- Material Science: "A pure-play industrial leader, consisting of DuPont's Performance Materials segment, as well as Dow's Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions, and Consumer Solutions ... operating segments." Revenue: $51 billion.
- Specialty Products: "The businesses will include DuPont's Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications, as well as the Dow Electronic Materials business." Revenue: $13 billion.
The companies hope to save $3 billion during the merger period and DuPont already plans to cut around 10% of staff. Dow will also purchase glassmaker Corning's 50% stake in the Dow Corning joint venture. Reuters reports that the merger may spur other deals, such as another attempt by Monsanto to purchase Syngenta. We've had a lot of merger news lately but this one will still rank among the twenty biggest ever.
How about some Teflon to cleanse this news from your mind?
(Score: 2) by frojack on Saturday December 12 2015, @03:52AM
What do those people say about companies that split based on Market segment?
Seems HP is doing that, as is Alcoa, as well as Yum brands, eBay, Symantec, ConAgra. The list is pretty log
Why? Because its mor profitable [forbes.com]:
Shares of North American conglomerates were outperformed by their split-up rivals by an average of 11.4 percent from 2000 to 2010, Shivdasani found.
Not only that, but Shivdasani’s data also found that in the three months following an organization’s announcement of a split, their shares outperformed their rivals by 6 percent, a trend believed to be set to continue.
Probably has something to do with business finally getting around to look at efficiency, and notice that two competing small divisions never gain traction, but once combined there are economies of scale, as well as cost savings. Lots of companies have a division just because their competition has one, and neither is all that successful. The difference these days is companies have finally gotten over themselves, and are willing to trade the cards in their hand for a better hand.
Yup. Employees, desks, buildings, traded like so many monopoly pieces.
No, you are mistaken. I've always had this sig.
(Score: 1) by redneckmother on Saturday December 12 2015, @04:35AM
Mergers, splits, blah blah blah...
To me, the fundamental problem lies (in at least two senses of the term) within "The United States of Corporate America".
Individuality, which was fundamental when the US was founded, is (effectively) dead, an anachronism. As several of the founders and subsequent leaders warned, the US has succumbed to corporatism.
“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”
― Benito Mussolini
Just my opinion (and, yes, I know the asshole quote).
Mas cerveza por favor.
(Score: 0) by Anonymous Coward on Saturday December 12 2015, @05:27AM
FYI Mussolini never said that and fascism typically involves violence for the very little reason [vox.com] other than the sake of violence. It also has little to do with economics.