WILMINGTON, Del. and MIDLAND,
Mich., Dec. 11, 2015
/PRNewswire/ -- DuPont (NYSE: DD) and The Dow Chemical Company
(NYSE: DOW) today announced that their boards of directors
unanimously approved a definitive agreement under which the
companies will combine in an all-stock merger of equals. The
combined company will be named DowDuPont. The parties intend to
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 leading global pure-play
Agriculture company; a leading global pure-play Material Science
company; and a leading technology and innovation-driven Specialty
Products company. Each of the businesses will have clear focus, an
appropriate capital structure, a distinct and compelling investment
thesis, scale advantages, and focused investments in innovation to
better deliver superior 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 chief executive officer. "Over
the last decade our entire industry has experienced tectonic shifts
as an evolving world presented complex challenges and opportunities
– requiring each company to exercise foresight, agility and focus
on execution. This transaction is a major accelerator in Dow's
ongoing transformation, and through this we are creating
significant value and three powerful new companies. This merger of
equals significantly enhances the growth profile for both
companies, while driving value for all of our shareholders and our
customers."
"This is an extraordinary opportunity to deliver long-term,
sustainable shareholder value through the combination of two highly
complementary global leaders and the creation of three strong,
focused, industry-leading businesses. 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," said Edward D. Breen, chairman and chief executive
officer of DuPont. "For DuPont, this is a definitive leap forward
on our path to higher growth and higher value. This merger of
equals will create significant near-term value through substantial
cost synergies and additional upside from growth synergies. Longer
term, the three-way split we intend to pursue is expected to unlock
even greater value for shareholders and customers and more
opportunity for employees as each business will be a leader in
attractive segments where global challenges are driving demand for
these businesses' distinctive offerings."
HIGHLY SYNERGISTIC TRANSACTION
Upon closing of the transaction, the combined company would be
named DowDuPont and have a combined market capitalization of
approximately $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 percent
of the combined company, on a fully diluted basis, excluding
preferred shares.
The transaction is expected to deliver approximately
$3 billion in cost synergies, with
100 percent of the run-rate cost synergies achieved within the
first 24 months following the closing of the transaction.
Additional upside of approximately $1
billion is expected from growth synergies.
INTENDED SEPARATION INTO THREE INDEPENDENT, PUBLICLY TRADED
COMPANIES
It is the intention of both companies' boards of directors that,
following the merger, DowDuPont would pursue a tax-free separation
into three independent, publicly traded companies with each
targeting an investment grade credit rating. Each would be a
strong, focused business with powerful innovation capabilities,
enhanced global scale and product portfolios, focused capital
allocation, and a distinct competitive position. The three
businesses that the boards intend to separate are:
- Agriculture Company: Leading global pure-play
agriculture company that unites DuPont's and Dow's seed and crop
protection businesses. The combined entity will have the most
comprehensive and diverse portfolio and a robust pipeline with
exceptional growth opportunities in the near-, mid- and long-term.
The complementary offerings of the two companies will provide
growers across geographies with a broad portfolio of solutions and
greater choice. Combined pro forma 2014 revenue for Agriculture is
approximately $19 billion.
- Material Science Company: 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 (excluding the Dow
Electronic Materials business) operating segments. The combination
of complementary capabilities will create a low-cost,
innovation-driven leader that can provide customers in high-growth,
high-value industry segments in packaging, transportation, and
infrastructure solutions, among others with a broad and deep
portfolio of cost-effective offerings. Combined pro forma 2014
revenue for Material Science is approximately $51 billion.
- Specialty Products Company: A technology driven
innovative leader, focused on unique businesses that share similar
investment characteristics and specialty market focus. The
businesses will include DuPont's Nutrition & Health, Industrial
Biosciences, Safety & Protection and Electronics &
Communications, as well as the Dow Electronic Materials business.
Together, their complementary offerings create a new global leader
in Electronics Products, and each business will benefit from more
targeted investment in their productive technology development and
innovation capabilities. Combined pro forma 2014 revenue for
Specialty Products is approximately $13
billion.
Advisory Committees will be established for each of the
businesses. Breen will lead the Agriculture and Specialty Products
Committees, and Liveris will lead the Material Science Committee.
These Committees will oversee the respective businesses, and will
work with Liveris and Breen on the intended separation of the
businesses into independent, standalone entities.
MANAGEMENT, GOVERNANCE AND CORPORATE HEADQUARTERS
Upon completion of the transaction, Liveris, President, Chairman
and CEO of Dow, will become Executive Chairman of the newly formed
DowDuPont Board of Directors and Breen, Chair and CEO of DuPont,
will become Chief Executive Officer of DowDuPont. In these roles,
both Liveris and Breen will report to the Board of Directors. In
addition, when named, the chief financial officer will report to
Breen.
DowDuPont's board is expected to have 16 directors, consisting
of eight current DuPont directors and eight current Dow directors.
The full list of directors will be announced prior to or in
conjunction with the closing of the merger. The Committees of each
company will appoint the leaders of the three new standalone
companies prior to a contemplated spin-off.
Following the closing of the transaction, DowDuPont will be dual
headquartered in Midland, Michigan
and Wilmington, Delaware.
APPROVALS AND TIME TO CLOSE
The merger transaction is expected to close in the second half
of 2016, subject to customary closing conditions, including
regulatory approvals, and approval by both Dow and DuPont
shareholders. The subsequent separation of DowDuPont, which the
companies intend to pursue, would be expected to occur 18-24 months
following the closing of the merger.
CONFERENCE CALL AND WEBCAST DETAILS
Dow and DuPont will host a joint conference call and webcast
today at 8:00 a.m. Eastern Time
(U.S.) to discuss the proposed merger. Participants will include
Dow's chairman and CEO and DuPont's chairman and CEO. To access the
audio webcast please visit the Investor Relations sections of Dow
or DuPont's websites. For those unable to listen to the live
broadcast, a replay will be available on both websites.
A copy of the investor presentation will be made available on
both companies' Investor Relations websites. Additional information
regarding the transaction can be found on
www.DowDuPontUnlockingValue.com.
ADVISORS
Klein and Company, Lazard, and Morgan Stanley & Co. LLC are
serving as Dow's financial advisors for the transaction with Weil,
Gotshal & Manges LLP acting as its legal advisor.
Evercore and Goldman, Sachs & Co. are serving as DuPont's
financial advisors for the transaction, with Skadden, Arps, Slate,
Meagher & Flom LLP acting as its legal advisor.
ABOUT DOW
Dow (NYSE: DOW) combines the power of science and technology to
passionately innovate what is essential to human progress. The
Company is driving innovations that extract value from the
intersection of chemical, physical and biological sciences to help
address many of the world's most challenging problems such as the
need for clean water, clean energy generation and conservation, and
increasing agricultural productivity. Dow's integrated,
market-driven, industry-leading portfolio of specialty chemical,
advanced materials, agrosciences and plastics businesses delivers a
broad range of technology-based products and solutions to customers
in approximately 180 countries and in high-growth sectors such as
packaging, electronics, water, coatings and agriculture. In 2014,
Dow had annual sales of more than $58
billion and employed approximately 53,000 people worldwide.
The Company's more than 6,000 products are manufactured at 201
sites in 35 countries across the globe. References to "Dow" or the
"Company" mean The Dow Chemical Company and its consolidated
subsidiaries unless otherwise expressly noted. More information
about Dow can be found at www.dow.com.
ABOUT DuPONT
DuPont (NYSE: DD) has been bringing world-class science and
engineering to the global marketplace in the form of innovative
products, materials, and services since 1802. The company
believes that by collaborating with customers, governments, NGOs,
and thought leaders, we can help find solutions to such global
challenges as providing enough healthy food for people everywhere,
decreasing dependence on fossil fuels, and protecting life and the
environment. For additional information about DuPont and its
commitment to inclusive innovation, please visit
www.dupont.com.
Important Information About the Transaction and Where to Find
It
In connection with the proposed transaction, Dow and DuPont will
cause DowDuPont to file with the Securities and Exchange Commission
("SEC") a registration statement on Form S-4 that will include
a joint proxy statement of Dow and DuPont and that also will
constitute a prospectus of DowDuPont. Dow, DuPont and DowDuPont may
also file other documents with the SEC regarding the proposed
transaction. This document is not a substitute for the joint proxy
statement/prospectus or registration statement or any other
document which Dow, DuPont or DowDuPont may file with the SEC.
INVESTORS AND SECURITY HOLDERS OF DOW AND DUPONT ARE URGED TO READ
THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS
AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED
WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND RELATED MATTERS. Investors and security holders may obtain free
copies of the registration statement and the joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by Dow, DuPont and DowDuPont through the web site
maintained by the SEC at www.sec.gov or by contacting the investor
relations department of Dow or DuPont at the following:
Dow
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DuPont
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2030 Dow
Center
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974 Centre
Road
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Midland, MI
48674
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Wilmington, DE
19890
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Attention: Investor
Relations
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Attention: Investor
Relations
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+1
989-636-1463
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+1
302-774-4994
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Participants in the Solicitation
Dow, DuPont,
DowDuPont and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information regarding
Dow's directors and executive officers, including a description of
their direct interests, by security holdings or otherwise, is
contained in Dow's Form 10-K for the year ended December 31, 2014 and its proxy statement filed
on March 27, 2015, which are filed
with the SEC. Information regarding DuPont's directors and
executive officers, including a description of their direct
interests, by security holdings or otherwise, is contained in
DuPont's Form 10-K for the year ended December 31, 2014 and its proxy statement filed
on March 23, 2015, which are filed
with the SEC. A more complete description will be available
in the registration statement on Form S-4 and the joint proxy
statement/prospectus.
No Offer or Solicitation
This communication is not
intended to and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote of approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Cautionary Notes on Forward Looking Statements
This
communication contains "forward-looking statements" within the
meaning of the federal securities laws, including Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as "expect," "anticipate," "intend," "plan,"
"believe," "seek," "see," "will," "would," "target," similar
expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. These and other forward-looking statements,
including the failure to consummate the proposed transaction or to
make or take any filing or other action required to consummate such
transaction on a timely matter or at all, are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those expressed in any forward-looking statements. Important
risk factors that may cause such a difference include, but are not
limited to, (i) the completion of the proposed transaction on
anticipated terms and timing, including obtaining shareholder and
regulatory approvals, anticipated tax treatment, unforeseen
liabilities, future capital expenditures, revenues, expenses,
earnings, synergies, economic performance, indebtedness, financial
condition, losses, future prospects, business and management
strategies for the management, expansion and growth of the new
combined company's operations and other conditions to the
completion of the merger, (ii) the ability of Dow and DuPont to
integrate the business successfully and to achieve anticipated
synergies, risks and costs and pursuit and/or implementation of the
potential separation, including timing anticipated, any changes to
the configuration of businesses included in the potential
separation if implemented, (iii) potential litigation relating to
the proposed transaction that could be instituted against Dow,
DuPont or their respective directors, (iv) the risk that
disruptions from the proposed transaction will harm Dow's or
DuPont's business, including current plans and operations, (v) the
ability of Dow or DuPont to retain and hire key personnel, (vi)
potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the merger, (vii)
uncertainty as to the long-term value of DowDuPont common stock,
(viii) continued availability of capital and financing and rating
agency actions, (ix) legislative, regulatory and economic
developments and (x) unpredictability and severity of catastrophic
events, including, but not limited to, acts of terrorism or
outbreak of war or hostilities, as well as management's response to
any of the aforementioned factors. These risks, as well as other
risks associated with the proposed merger, will be more fully
discussed in the joint proxy statement/prospectus that will be
included in the registration statement on Form S-4 that will be
filed with the SEC in connection with the proposed merger. While
the list of factors presented here is, and the list of factors to
be presented in the registration statement on Form S-4 are,
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward looking statements. Consequences of
material differences in results as compared with those anticipated
in the forward-looking statements could include, among other
things, business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which
could have a material adverse effect on Dow's or DuPont's
consolidated financial condition, results of operations, credit
rating or liquidity. Neither Dow nor DuPont assumes any obligation
to publicly provide revisions or updates to any forward looking
statements, whether as a result of new information, future
developments or otherwise, should circumstances change, except as
otherwise required by securities and other applicable laws.
1 Projected $30B in
market value based on assumption of an EV/EBITDA multiple of 10x on
the $3B in synergies
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SOURCE DuPont