It’s official. Just a few days after global media was awash with rumours of a potential merger between giants, Dow Chemical (Midland, Michigan / USA; www.dow.com) and DuPont (Wilmington, Delaware / USA; www.dupont.com) have issued a press release confirming the “merger of equals” (for previous coverage, see Plasteurope.com of 09.12.2015). The boards of both companies unanimously approved the plans, and if the necessary regulatory approvals are forthcoming, the merged DowDuPont could make its debut in H2 next year.

Once the two groups have officially merged, they intend to split into three independent, publicly traded companies by means of a tax-free spin-off. The split would give each business a clear focus. The two companies plan to merge their seed and crop protection businesses into a new agricultural company, while a new firm focused on speciality products will consist of DuPont’s Nutrition & Health, Industrial Biosciences, Safety & Protection and Electronics & Communications businesses, as well as Dow’s Electronics Materials unit. In the plastics realm, a new material science giant would emerge – comprised of DuPont’s Performance Materials segment as well as Dow’s Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions and Consumer Solutions businesses. The combined pro forma 2014 revenues of the intended material sciences spin-off come to USD 51 bn.

Each of the proposed three new businesses will have its own advisory board. While current DuPont CEO Edward Breen – who has been tapped as the incumbent CEO of the new DowDuPont – will lead the committees of the Agriculture and Specialty Products spin-offs, Andrew Liveris will lead the Material Science committee. Under the current plans, the Dow CEO will serve as executive chairman of DowDuPont. The spin-offs into the three separate units are expected to be completed about 18-24 months after the closing of the merger.

The creation of DowDuPont – which will be dual-headquartered in Midland and Wilmington – is expected to achieve run-rate synergies of about USD 3 bn, with an additional anticipated USD 1 bn in growth synergies. Dow and DuPont shareholders – whose pressure likely lies at the root of the merger – will each own about 50% of the combined company. While DuPont’s shareholders will receive 1.3 shares for each of their current shares, Dow’s owners will transfer on a 1:1 basis.

Commenting on the decision, Dow CEO Liveris said, “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.” Referring to the intention to split into three separate companies, Breen added that, “Each of these businesses will be able to allocate capital more effectively, apply its powerful innovation more productively, and extend its value-added products and solutions to more customers worldwide.”