DuPont and The Dow Chemical Company have agreed to merge

The combined company will be called DowDuPont.

DuPont and The Dow Chemical Company announced that their boards of directors have unanimously approved the merger of the two companies. The combined company will be called DowDuPont. Both parties intend to subsequently proceed with the separation of the new company into three independent companies that will be listed on the stock exchange through a tax-free spin off. This will occur as soon as possible, but is expected to occur within 18 to 24 months after closing of the merger subject to regulatory and board approval.

These companies will include a leading agricultural company; a leader in materials science and also a leader in specialty technology and innovation. Each of the companies will have a clear focus, an appropriate capital structure, an attractive investment philosophy, new competitive advantages and investments aimed at offering the best solutions for our clients.

“This transaction is a game-changer for our industry and reflects the culmination of a vision we’ve had for more than a decade to bring together these two powerful leaders in innovation and materials science,” said Andrew N. Liveris, chairman and CEO of Dow. “Over the past decade, our entire industry has experienced major changes in a world that presents complex challenges and opportunities that also require every company to be forward-thinking, agile and focused on execution. This transaction is an important accelerator in “Dow’s ongoing transformation, and through it we create significant value and three powerful new companies. This merger of equals significantly improves the growth profile for both companies, while adding value for all of our shareholders and our customers.”

“This is an outstanding 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 companies. Each of these companies will be able to allocate more capital efficiently, more productively apply their strong innovation and to expand our value-added products and solutions to more customers around the world,” said Edward D. Breen, DuPont CEO and Chairman of the Board. “For DuPont, this is a definite step forward on our path to greater growth and greater value. This merger of equals will create significant short-term value through significant cost synergies and further increase growth synergies. And the long-term separation of the three companies intends to create greater value for shareholders and customers and more opportunities for employees, since each company will be a leader in attractive segments where global challenges are driving demand for the distinctive offerings of those companies,” said DuPont’s CEO.

Transaction: combining synergies

Upon closing of the transaction, the combined company would be called DowDuPont and would have a combined market capitalization of approximately $130 billion after the announcement. Under the terms of the transaction, Dow shareholders will receive a fixed rate of $1.00 for each DowDuPont share, and DuPont shareholders will receive a fixed rate of $1,282 per DowDuPont share. Dow and DuPont shareholders will own approximately 50 percent of the combined company, on a fully diluted basis, excluding preferred stock.

The transaction is expected to generate approximately US$3 billion in synergy costs, 100 percent of which will be incurred within 24 months of the closing of the transaction. Growth synergies are expected to generate approximately USD 1 billion

Intention to separate into three independent and public companies

It is the intention of the boards of directors that, following the merger, DowDuPont will proceed with a tax-free separation into three independent publicly traded companies with their own credit ratings. Each will be very strong in its business niche, will have a strong investment capacity, with its own product portfolio, own capital and great potential for market competition. The three businesses that the company will try to separate are:

· Agricultural company: the world’s leading agricultural company that unites the seed and crop protection businesses of DuPont and Dow. The combined entity will have the broadest and most diverse portfolio, much more robust with exceptional growth opportunities in the short, medium and long term. The complementary offerings of the two companies will provide manufacturers worldwide with a broad portfolio of solutions and greater choice. Total agricultural new business revenue in 2014 was approximately $19 billion.

· Advanced Materials Company: a specialty company and industry leader, comprising DuPont’s Performance Materials segment, as well as Dow Performance Plastics, Performance Materials and Chemicals, Infrastructure Solutions and Consumer Solutions (excluding the Dow Electronic Materials business). The combination of operational capacity will create low costs and lead the way in innovation. They will be able to offer high-growth, high-value clients in packaging, transportation and infrastructure solutions, among others. The combined revenue of the advanced materials industry in 2014 was approximately $51 billion.

· Specialized company: (Materials Sciences Companies) A ​​leader in technology and innovation, focused on unique companies that share similar investment characteristics and specialty market focus. The companies will include DuPont Nutrition and Health, Industrial Biosciences, Safety and Security, and Electronics and Communications, as well as the Dow Electronic Materials business. Together, their complementary offerings create a new global leader in electronics, and each company will benefit from a more targeted investment in its technology development capabilities and productive innovation. The new company’s combined revenues as of 2014 were $13 billion.

An Advisory Board will be established for each of the three companies. Breen will chair the Specialty and Agriculture Committees, and Liveris will chair the Materials Science Committee. These committees will be responsible for overseeing the respective companies and will work with Liveris and Breen on the planned separation of the companies into independent, autonomous entities.

Management, management and headquarters of the company

Upon completion of the transaction, Liveris, chairman and chief executive officer of Dow, will become executive chairman of the newly created board of the combined DowDuPont company, and Breen, chairman and chief executive officer of DuPont, will become the new chief executive officer of DowDuPont. In these roles, both Liveris and Breen will report to the board of directors. Additionally, when a CFO is appointed, he will report to Breen.

DowDuPont’s board of directors is expected to have 16 directors, including eight current DuPont directors and eight current Dow directors. A complete list of directors will be announced prior to or in connection with the closing of the merger. The boards of each company will appoint the executives of the three new independent companies in advance of the planned spin-off.

After the transaction closes, DowDuPont will have dual headquarters, one in Midland, Michigan and the other in Wilmington, Delaware.

Approvals and closing

The merger transaction is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals and Dow and DuPont stockholder approval. The subsequent separation of DowDuPont, which the companies intend to complete, is expected 18-24 months after the closing of the merger.

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