Shareholders Back DowDuPont

OMAHA (DTN) -- Shareholders from Dow Chemical and DuPont voted Wednesday to approve the merger, creating DowDuPont at separate but simultaneous shareholder meetings Wednesday morning.

In a joint statement, company executives stated the vote was a key milestone in the merger, which they expect to be completed sometime later this year after regulatory approval.

The merger creates one of the largest biotechnology, seed and agrichemical companies in the world with an array of brand names for seed, biotech traits, insecticides, herbicides and fungicides.

The $130 billion merger is expected to generate roughly $3 billion in cost savings as each company has already announced facility closures and layoffs.

"The overwhelming support of Dow and DuPont stockholders to approve this historic merger transaction is a clear testament to the compelling value proposition and enhanced shareholder value that DowDuPont represents," said Andrew Liveris, Dow's chairman and chief executive officer. "Today is a pivotal step toward bringing together these two iconic enterprises, and to the subsequent intended separation into three leading, independent technology and innovation-based science companies that will generate significant benefits for all stakeholders."

Ed Breen, chair and chief executive officer of DuPont, added: "We are pleased to receive such strong support from our stockholders, which represents an essential milestone in the combination of our two companies and our intention to subsequently separate into three independent companies. We are now focused on important next steps toward completing the merger transaction, including working with regulators in the appropriate jurisdictions. We are confident that this merger will create long-term, sustainable value for stockholders and superior solutions and choices for customers."

Dow and DuPont plan to bring together the two chemical giants then spin them off over the next two years into separate divisions, including agricultural, industrial chemical and specialty products companies. The agricultural division would have about $16 billion in combined annual revenues.

The deal must still be approved by the U.S. Department of Justice for possible antitrust issues. Further, at least 19 other governments, including the European Union and China, must also approve the merger.

Late last week, the National Corn Growers Association drafted a letter to the antitrust division at the Department of Justice expressing some concerns about DowDuPont due to increased concentration in the seed business.

"This increase in market concentration does cause us significant concern that seed industry competition could be diminished as a result of this merger," NCGA wrote. "We would ask the Department to carefully evaluate the seed market impacts to determine whether remedies should be applied that could ensure healthy competition within the corn seed market."

Still, NCGA also cited potential synergy for farmers through innovation potential. The corn growers also noted it takes a significant amount of capital for any company to bring new seed and chemical products on to the market.

Last month, the National Farmers Union, American Antitrust Institute and Food & Water Watch sent a joint letter to the Justice Department urging the Obama administration to challenge the merger in court. The groups criticized the prospect of allowing any of the largest seed and ag chemical companies to merge.

"Seed costs are the highest input expense for farmers. While some of the cost can be attributed to more sophisticated technology, we have seen time and again that consolidation and market restructuring has increased the cost of crop inputs. In a lagging farm economy with multi-year trends of low commodity prices, additional cost increases for crop inputs could cripple a lot of family farms in this country," said NFU President Roger Johnson.

The merger comes as Bayer and Monsanto go back and forth over the prospects of a merger. Monsanto on Tuesday rejected Bayer's latest overture. Additionally, U.S. national security experts continue to scrutinize the potential deal between ChemChina and Syngenta as well.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/BAS)

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