DECATUR, Ill. (DTN) -- There's nothing simple about combining two corporate giants. Some logistics were released Friday regarding how agriculture will emerge in the combined DowDuPont structure. However, farmers aren't likely to see changes in branding during the upcoming planting season.
The corporate headquarters for the newly formed agriculture company will be located in Wilmington, Delaware, according to a news release issued by Dow AgroSciences. Sites in Johnston, Iowa, and Indianapolis, Indiana, will serve as Global Business Centers, with leadership of business lines, business support functions, research and development, global supply chain, and sales and marketing capabilities concentrated in the two Midwest locations. In addition, the independent agriculture company will feature DuPont in the company's name, following completion of the corporate naming and branding process.
"This efficient structure takes full advantage of the unique expertise and resources that exist in each location, enabling us to deliver the long-term opportunity for the leading global agriculture company we intend to create," said Edward D. Breen, chairman and chief executive officer of DuPont. "Our deep presence in Iowa and Indiana will continue the close ties to our customer base and the broader agriculture community, while leveraging the existing corporate infrastructure and expertise we have in Delaware -- DuPont's home for more than 200 years."
In December, Midland, Michigan-based Dow, a giant in the chemical and agriculture industries and maker of products ranging from corn seeds to plastic, struck a deal to combine with DuPont to form a $120 billion company with $90 billion in sales. The companies expect the transaction to close in the second half of 2016, subject to necessary closing conditions and regulatory approvals.
If the deal goes through, the companies have said they will cut some $3 billion in costs before splitting into three separate businesses 18 to 24 months after the merger closes. Agriculture is one of those businesses.
How seed and crop protection capabilities will emerge from the merger is yet to be defined. Dow AgroSciences spokesperson Kenda Resler-Friend told DTN by email that decisions on how brands might be handled and integrated have not been made. "It's too preliminary to comment any further at this time," Resler-Friend said.
For the 2016 season, she added that growers should not see branding changes and should continue to work with their seed representatives. "It is business as usual until the transaction closes, and we remain competitors until that time," she added.
Seed industry analyst Kent Schulze estimates DuPont's total U.S. corn seed market share at 34% among its 10 brand offerings. "After a 1-2 point decline in 2015, DuPont soybean seed market share totals 31%," he said. "Combined market share for Dow AgroSciences' six seed brands in the U.S. are estimated at 6% for corn seed and 5% for soybeans."
A good example of one of the hurdles still to be faced includes how the combined company will proceed with weed-control trait packages. Dow AgroSciences has developed the Enlist Weed Control System, a new 2,4-D trait tolerance program. Yet, DuPont Pioneer has been including the Roundup Ready Xtend Crop System, which offers crop tolerance to dicamba herbicides, into their germplasm. Pioneer is offering 30 new Xtend soybean varieties in 2016.
Dan Alexander, DuPont Pioneer senior marketing manager—soybeans, told DTN through email correspondence that the proposed merger with Dow "will better position us to offer growers around the world increased options for weed control including both Enlist and Xtend. In North America, Pioneer continues to plan to introduce Pioneer brand soybeans with Roundup Ready 2 Xtend technology."
Andrew N. Liveris, chairman and chief executive officer of Dow, extoled the efficiencies to be gained by the merger in Friday's news release. "The intended agriculture company will be highly focused, stronger, more competitive, more resilient and better equipped to deliver growth and long-term, sustainable value than either DuPont or Dow could deliver on its own," he said. "Both companies have highly respected brands in the agriculture industry, such as Pioneer and Mycogen, which we will continue to build and leverage. Going forward, we will be better equipped to meet and exceed grower expectations for innovation in crop technology and agricultural services. We intend to bring a broader suite of products to the market, faster, to increase grower productivity and profitability," Breen concluded.
Headquarters location of the three independent, publicly traded companies will be:
-- Agriculture company: Unites the seeds and crop protection businesses from DuPont and Dow. The agriculture company will be headquartered in Wilmington, Delaware. In addition, the independent agriculture company will feature DuPont in the company's name.
-- Material science company: Consists of Dow's performance plastics, performance materials and chemicals, infrastructure solutions, consumer care and automotive solutions (excluding the Dow electronic materials business) operating segments, as well as DuPont's performance materials segment. The material science company will be headquartered in Midland, Michigan, and feature Dow in the company's name.
-- Specialty products company: A leading global specialty business to be composed of DuPont's nutrition and health, industrial biosciences, and protective solutions businesses, as well as the integration of DuPont's electronics and communications business. Headquartered in Wilmington, Delaware.
Prior to the intended separation into three independent companies, DowDuPont will be dual headquartered in Wilmington, Delaware, and Midland, Michigan.
Pamela Smith can be reached at Pamela.email@example.com
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