Dec. 22, 2015, 5:35 PM
- The combined DuPont (NYSE:DD) and Dow Chemical (NYSE:DOW) will cut costs more than the companies officially project - as high as $5.1B-$6.1B vs. the announced $3B - Alembic Global Advisors’ Hassan Ahmed says.
- Using a sum-of-the-parts valuation for both Dow and DuPont and layering on the valuation impact of cost synergies and growth projects points to ~40% upside from current levels for the merged company’s enterprise value, Ahmed calculates.
- The merged company currently trades at an EV-to-EBITDA of 5.6x vs. the typical U.S. specialty chemical company multiples of 10x-12x, according to Ahmed, and he considers his analysis conservative since it does not bake in an ethylene up-cycle or growth synergies.
Dec. 18, 2015, 12:17 PM
- Interim Syngenta (SYT +2.1%) CEO John Ramsay tells Dow Jones the company is discussing possible deals with "a number of parties" and is open to combinations with companies including Monsanto (MON +0.9%).
- While Ramsay says MON has not revived its $46B takeover effort that was abandoned in August, his comment that SYT is "interested in any value-adding opportunity that exists for us in this industry, which includes Monsanto and many others" marks a notable departure from its earlier stand.
- Last week's merger between DuPont (DD -0.7%) and Dow Chemical (DOW -0.4%) removed two potential partners for SYT and eventually could pose a greater competitive threat in the ~$100B global seed and pesticide industry.
Dec. 18, 2015, 8:26 AM
Dec. 15, 2015, 6:28 PM
- The tax-free treatment of the spinoffs Dow Chemical (NYSE:DOW) and DuPont (NYSE:DD) plan to carry out after they merge their businesses is a prime driver of the deal, potentially saving tens of billions of dollars, industry experts tell Reuters.
- Unlike last month's Pfizer-Allergan merger, where tax savings are the result of Pfizer redomiciling to Allergan's home base of Ireland in an inversion, the Dow-DuPont tax savings hinge on the deal structure as a merger of equals, a rare event that requires companies of the same size and scope, tax experts say.
- Companies that have been through a change of control typically are liable to pay capital gains taxes on subsequent spinoffs; Dow and DuPont plan to create three publicly-traded businesses and plan to argue that no change of control will have occurred by structuring their initial deal as a merger of equals.
- Bolstering their view that a change of control has not occurred is that the two companies have many shareholders in common: Vanguard, State Street, Capital World Investors and BlackRock are, in that order, the top holders of both companies' stock.
- Dow and DuPont have not disclosed estimates for tax savings, but people familiar with the deal say the savings will far exceed the $3B in annual cost synergies the companies expect.
Dec. 15, 2015, 12:33 PM
- Dow Chemical (DOW -0.7%) is downgraded to Neutral from Buy with a $53 price target at UBS, which says the stock will now be linked with DuPont (DD -0.6%) until the merger closes, likely in H2 2016.
- While DowDuPont sees minimum antitrust scrutiny, UBS thinks regulators will at a minimum perform a "significant review" in seeds and pesticides given the issues raised when Monsanto bid for Syngenta.
- RBC analysts see 20% upside potential in the combined entity when giving full credit to targeted synergies and just 2% of downside risk, and believes investors are skeptical on giving full credit to merger synergies in the deal.
Dec. 14, 2015, 4:51 PM
- DuPont (NYSE:DD) announces a reshuffling of its executive ranks ahead of its merger with Dow Chemical, moves it says will "streamline" growth and simplify the organization.
- Under leadership changes to take effect Jan. 1, Executive VP James Collins will lead DuPont’s agriculture segment, and senior VP Marc Doyle is promoted to executive VP in charge of the electronics and communications, industrial biosciences, nutrition and health, performance materials, and safety and protection segments.
- Richard Olson, senior VP for corporate services, will assume responsibility for safety, health and environment, operational excellence, facility services and real estate, sourcing and logistics, and information technology, and senior VP Douglas Muzyka adds responsibilities for engineering technologies and the company’s regional leadership.
- Executive VP James Borel, who leads DD’s agricultural segment, and Gary Spitzer, senior VP for integrated operations and engineering, will retire after more than 30 years with the company.
Dec. 14, 2015, 12:27 PM
- DuPont (DD -3.2%) is downgraded to Hold from Buy with a $75 price target at Jefferies, which expects the stock to be stuck in a rut following the announcement of its plan to merge with Dow Chemical (DOW -3.8%).
- The firm expects DD’s shares now will be driven less by agriculture newsflow and more by details relating to cost synergies, levers to deliver growth synergies and risks to Dow’s petrochemical chain margins.
- Jefferies expects the merger to result in the creation of a strong player in agrichemicals, seeds and agronomy, and petrochemicals, and an innovator in industrial biotech and nutrition, but that integration and end-market risks are likely to restrict the value of DD’s shares through late 2016.
Dec. 14, 2015, 8:05 AM
- Dow Chemical's (NYSE:DOW) Board of Directors has announced its unanimous and full support for the merger of equals with DuPont (NYSE:DD) and intended separation.
- "This merger is the optimal path forward and a win for all of our shareholders. We stand by both our and DuPont's Boards' unanimous decisions to conduct this transaction, and are fully focused on achieving the successful integration of both powerhouse companies."
Dec. 13, 2015, 10:51 PM
- Third Point's Daniel Loeb is calling for the removal of Dow Chemical (NYSE:DOW) CEO Andrew Liveris following the company's announced deal to merge with DuPont (NYSE:DD), WSJ reports.
- Loeb reportedly sent a private letter to Dow's board yesterday essentially supporting the merger but questioning whether the deal was rushed to be completed before the expiration of a standstill agreement this weekend that had barred him from publicly speaking about Dow.
- Dow's directors, including one appointed to the board last year at the behest of Third Point, are defending the deal and Liveris, calling the timing complaint “ridiculous” and "laughable."
- Loeb’s feud stands in contrast with the involvement in the merger by Nelson Peltz's Trian Fund, which was at odds with DuPont before the two sides came together in recent weeks to help plan the deal.
Dec. 11, 2015, 12:27 PM
- Dow Chemical (DOW -3.5%) and DuPont (DD -5.5%) remain sharply lower after their merger news, giving back gains sparked by the earlier speculation around a deal, as the companies "missed several significant opportunities for long-term value creation," according to Bernstein analysts.
- DuPont shares are taking the worst of it, as it also announced restructuring plans including a 10% cut to its global workforce, and gave downbeat comments on its 2016 sales growth.
- DuPont CEO Edward Breen and Dow's Andrew Liveris said in a morning conference call that the planned breakup into three separate business would occur "as soon as feasible" but that it still could take up to two years after the merger closes, suggesting the breakup may not occur until 2018.
- Breen also said no major divestitures were expected as the deal goes before antitrust reviewers, with both companies likely to sell minor pieces of their businesses "but nothing that would move the needle."
- Liveris hinted at an eventual retirement, saying there would "almost certainly" be a new leader of the materials company, and that "I do want to eventually go to the place where the future of the company is not just beholden to my presence."
Dec. 11, 2015, 9:16 AM
Dec. 11, 2015, 7:40 AM
- Separate from its merger news, DuPont (NYSE:DD) announces a 2016 restructuring plan designed to cut $700M in costs from 2015.
- DuPont says the cost cuts include a range of structural actions across all businesses and staff functions, affecting 10% of its global workforce: the company had ~63K employees at the end of 2014.
- DuPont expects to book a pretax charge of $780M related to the cuts.
- DuPont says it expects 2016 sales growth will be "challenging," given global economic conditions in agriculture and emerging markets; it foresees currency headwinds of ~$0.25/share, due to the continued strengthening of the U.S. dollar primarily against the Brazilian real.
- DD -3.4% AH.
Dec. 11, 2015, 6:57 AM
- Dow Chemical (NYSE:DOW) and DuPont (NYSE:DD) have agreed to a merger of equals. The deal is structured as an all-stock transaction.
- The new powerhouse company will be called DowDuPont until a split into three separate publicly-traded entities is fired off, roughly 18 to 24 months after the closing of the merger.
- Cost synergies from the Dow-DuPont combination are estimated to be as high as $3B within two years.
- Shares of Dow and DuPont have already tracked higher this week with the deal widely expected.
- Previously: Dow-DuPont megamerger likely to get close antitrust scrutiny (Dec. 10 2015)
- Previously: DuPont, Dow Chemical tally record sessions after deal report (Dec. 09 2015)
Dec. 10, 2015, 9:39 AM
- The possible merger between Dow Chemical (DOW -0.8%) and DuPont (DD -1%) - which CNBC's Marc Faber reports will be announced tomorrow - would create a chemical industry colossus prompting what probably would be a detailed and lengthy review by government antitrust enforcers.
- A merger likely would draw complaints from some farmers and other customers wary of market concentration, but the two companies are said to have spent little time on antitrust because their lawyers believe there is little concern thanks to the planned three-way split of the combined businesses into new companies centered on agriculture, plastics and other chemical-based materials, and specialty products such as enzymes.
- "For the last 10 years, the companies have not truly been competitors," says Bernstein analyst Jonas Oxgaard; Dow and DuPont "used to be the two big rivals in American chemicals, but they've gone down completely divergent paths."
Dec. 9, 2015, 6:35 PM
- The mere prospect of a historic $130B tie-up between DuPont (NYSE:DD) and Dow Chemical (NYSE:DOW) delivered record gains to shareholders today: DuPont (+11.8%) and Dow (+11.9%) each tallied their biggest price gains since FactSet started compiling data 43 years ago, and it was Dow's first double-digit percent increase since 2009.
- Citi analyst P.J. Juvekar thinks the possible deal is a positive for DuPont, giving it the opportunity to extract “significant synergies which would take the company further towards its cost cutting goal,” and he maintains a Buy rating on the stock as well as his $76 price target, now only slightly above today's close at $74.49.
- The deal apparently would be followed by a breakup into three businesses: agriculture, specialty chemicals and commodity chemicals; it's "like Pepsi and Coca-Cola merging, then splitting into syrup, bottling, and snacks and sundry businesses," says Eric Linser of Avant-Garde Advisors.
- The deal reportedly would be billed as a merger of equals, meaning there would not be a big premium for either set of investors; the talks could fall apart, and if the two sides manage to agree, antitrust regulators may not give their blessing.
Dec. 9, 2015, 12:10 PM
- Any merger between Dow Chemical (DOW +10.5%) and DuPont (DD +12.6%) would have far-reaching consequences for European rivals, prompting a series of moves as pesticide and seed makers scramble to face a combined U.S. giant.
- A merger would make it more likely that Monsanto (MON +0.2%) re-approaches Syngenta (SYT +7.7%), Bernstein analysts say, speculating that a new bid could come in at 485 Swiss francs, more than the 470 cash-and-stock offer withdrawn in August.
- The pressure on MON to defend its position as the biggest seeds player would be "huge" as chemical companies will want to defend or even strengthen their market positions, says MM Warburg's Oliver Schwarz.
- Regulatory hurdles to a merger would require the combined company to sell off some businesses, likely sparking interest from contenders such as BASF (OTCQX:BASFY -0.1%), Schwarz says. “All the big companies that are swimming in this pond would probably be interested in taking over assets that Dow or DuPont would sell."
E.I. du Pont de Nemours & Co. science-based products and services company. It operates through seven segments; Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Chemicals, Performance Materials, Safety and Protection. The Agriculture segment... More
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