Dow, DuPont stockholders approve $130 billion ‘merger of equals,’ both companies have Arkansas operations

DuPont and The Dow Chemical Company, both of which have substantial operations in Arkansas, announced Wednesday (July 20) stockholders of both companies have voted to approve all stockholder proposals necessary to complete the $130 billion merger of the two chemical industrial giants.

Stockholders of both companies approved the year’s biggest deal and so-called “merger of equals” at their respective special meetings of stockholders held on Wednesday. If the deal is approved by U.S. regulators, the merged chemical conglomerate then plans to pursue the intended spins of three highly-focused, independent publicly-traded companies.

“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 N. 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.”

DuPont and Dow intend that, following the consummation of the merger, the combined company will pursue the separation of the combined company’s Agriculture business, Material Science business and Specialty Products business into three independent companies, subject to approval by the DowDuPont board and receipt of any required regulatory approvals.

The intended subsequent separation into three independent, publicly traded companies is expected to be consummated as soon as practicable following the merger closing, but consummation of the separations is not expected to exceed 18-24 months after the merger closing.

Even with shareholder approvals, the proposed deal is expected to get a long review by the U.S. Justice Department. The transaction that would create a corporate colossus with three separate companies with market capitalization in excess of $130 billion, giving shareholders of both companies a 50-50 stake in three publicly traded companies.

Last month, U.S. Sen. Chuck Grassley, R-Iowa, sent a letter to the Department of Justice antitrust division asking for a careful analysis of the Dow-DuPont merger. Grassley is chairman of the Senate Judiciary Committee which has jurisdiction over antitrust issues.

Grassley expressed concerns that the proposed merger could negatively impact competition within the agricultural biotechnology and seed industry and have an adverse effect on farmers and consumers.

“I am concerned that this transaction will decrease competition in an agriculture sector that has already been subject to a number of waves of consolidation in recent years,” Grassley wrote. “The proposed transaction could raise barriers to entry in the market for smaller companies and potentially harm innovation, and could adversely impact choice and price of products for farmers and consumers.”

Grassley said he was also concerned about several biotech and seed companies that have announced potential mergers. Bayer AG is pursuing a $62 billion acquisition of Monsanto Co, the world’s top seed maker, while Chinese state-owned China National Chemical Corp , known as ChemChina, plans to buy Swiss crop chemicals company Syngenta AG for $43 billion.

Should these potential mergers succeed, only four major companies will remain, argued Grassley, whose Senate committee oversees U.S. antitrust issues.

In Arkansas, both Dow and DuPont have varied operations across the state in the chemical and agriculture business sectors. Talk Business & Politics was unable to obtain a total employee count of both companies in Arkansas.

In advance of the Wednesday’s stockholder approval, Dow officials announced in late June that they are moving forward with restructuring its ownership in advance of the merger with DuPont, hoping to achieve some $500 million in synergies from workforce consolidations and downsizings. Those actions would cut 2,500 jobs globally, which represent about four percent of Dow’s workforce.

When the deal was first announced in December 2015, both Dow and DuPoint officials stated that a number of operations will likely be divested, consolidated and downsized if the merger is eventually approved, creating more than $3 billion in total synergies. Together, Dow and DuPont employ more than 100,000 workers across the globe.