A man passes before Dupont corporate headquarters in Wilmington, Delaware, in the US.
Houston: Dow Chemical Co and DuPont Co pushed back the planned deadline for their merger again as the chemical makers advanced toward winning antitrust clearances by striking a $1.6bn transaction with pesticide maker FMC Corp.
The $78.7bn merger of equals will close in August, Dow and DuPont said in a statement. They had previously said the deal would close by the end of the first half. DuPont will acquire FMC’s health and nutrition business.
The FMC deal “satisfies the bulk” of the remedies needed to win consent from governments around the world, DuPont Chief Executive Officer Ed Breen said in an interview. The most recent delay in the closing of the Dow merger allows regulators at the European Commission and their global counterparts to review any antitrust implications of the FMC transaction, he said.
“This was a global remedy and the regulators all do talk with each other,” Breen said. “That is why we feel so great about the EC process.”
The closing extension is the latest for a 2015 agreement that was originally set to conclude by the end of 2016. The companies won conditional European Commission approval for the merger on March 27 by agreeing to sell off pesticide and polymer assets. They still need antitrust clearances from the US, Brazil and China.
“The delay is driven by the complexity of the asset swap,” Jonas Oxgaard, an analyst at Sanford C Bernstein & Co, said in a note to clients. He said it’s “somewhat disappointing to push things out further.” There may be “really little things” required by specific countries in order to win the remainder of the regulatory approvals, Breen said.
DuPont is selling herbicide and insecticide properties to FMC along with some related research-and-development programs. The assets, including top seller Rynaxypyr, last year generated $450 in earnings before interest, taxes, depreciation and amortization on revenue of $1.4bn, DuPont said. The Wilmington, Delaware-based company is acquiring FMC businesses in food and pharmaceutical ingredients generating $228m of Ebitda on $700m of sales, Breen said.
FMC will pay DuPont $1.2bn cash and allow DuPont to retain $425m in working capital to reflect the difference in the asset values, according to a separate statement.
Following the DuPont transaction, Philadelphia-based FMC will have more than 90 percent of sales from pesticides, becoming the world’s fifth biggest producer of crop protection chemicals, CEO Pierre Brondeau said on a separate conference call.
