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Yesterday, 3:14 PM
- Dow Chemical (DOW -2.1%) is upgraded to Positive from Neutral with a $54 price target, up from $46, at Susquehanna, even after rising nearly 12% in the past week.
- The firm says it remains positive on the combined company's agriculture segment given Dow and DuPont's (DD -2.6%) pursuit of cost reductions in ag prior to the H2 2016 merger closure, and its expectation of $1.25B of cost (primarily R&D) and $500M of growth synergies.
- The firm says it completed a revised valuation, changing the approach to now "apply the equity ratio to the pro-forma capital structure resulting in a 50/50 split," taking into consideration the Dow-DuPont combined entity.
- DuPont already had been rated Positive by Susquehanna, but now with a lowered price target of $69 from $77.
Tue, Jan. 26, 3:48 PM
- DuPont (DD +0.8%) says it now plans to cut $730M in expenses this year, up from its December projection of $700M in cost reductions amid a broad restructuring plan to eliminate ~5K jobs in an effort to improve profits and hasten integration with Dow Chemical (DOW +0.7%), company execs said in today's earnings conference call.
- "The big takeaway today is the pace of change that's happening at this company," says Edward Jones analyst Matt Arnold, who expects the cost cuts to continue and considers the current reductions just a starting point.
- CEO Edward Breen says there is "very little" to concern regulators about the company's pending merger with Dow and that it is unlikely to need to make significant asset sales, despite analyst speculation that the deal will face intense regulatory scrutiny.
- "We feel there is very little overlap, despite the size of the companies," Breen reiterates in a telephone interview with Reuters.
Fri, Jan. 22, 7:11 PM
- Few catalysts remain on the horizon to boost Dow Chemical (NYSE:DOW), especially as the merger with DuPont (NYSE:DD) and eventual split could take up to three years, says Citigroup’s P.J. Juvekar, who rates DOW at Neutral with a $45 price target.
- Even with the recent market selloff, Juvekar sees no near-term catalysts to push the stock, and weakness in oil prices and the Chinese economy are likely to persist throughout the year.
- The merger is expected to close in H2 2016 while the eventual split into three parts could take an additional 18-24 months - "a long time for investors to wait, as Dow’s fortunes are now tied to DD’s results, particularly in ag" Juvekar writes, adding that LyondellBasell (NYSE:LYB) is better positioned to benefit from a rebound in oil prices.
Fri, Jan. 8, 8:44 AM
- DuPont (NYSE:DD) +1.1% premarket after Bernstein upgrades shares to Outperform from Market Perform with an $81 price target, raised from $71, saying that although the structure of the merger with Dow Chemical (NYSE:DOW) could have been better and unlocked more value, it will still provide significant upside to both companies.
- Bernstein also sees additional upside from ethylene shortages, regardless of crude oil prices, as well as the possibility of an improved deal structure.
- Earlier: DuPont, Air Products downgraded at Citi; Celanese, Eastman upped to Buy (Jan. 5)
Dec. 29, 2015, 12:18 PM
- CEO Ed Breen disclosed in an employee memo DuPont (DD +1.7%) plans to lay off 1,700 of its 6,100 Delaware employees in early 2016. No local facilities will be shuttered. Breen: "The effect in Delaware will be significant, reflecting the urgent need to restructure our cost base and, as part of that effort, reduce our corporate overhead costs so that we can remain competitive."
- DuPont also states its Specialty Products business, one of three publicly-traded companies to exist after the Dow Chemical (DOW +0.4%) deal closes, will be headquartered in Wilmington.
- In tandem with the Dec. 11 Dow Chemical merger announcement, DuPont stated it planned to cut its 63K-strong global workforce by 10%. $700M/year in cost savings are sought.
- Both DuPont and Dow are higher on a day the S&P is up 0.9%. Dow's gains are limited by the fact the company is trading ex-dividend today.
- Prior DuPont/Dow Chemical coverage
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. 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, 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)
E I du Pont de Nemours & Company is a science and technology based company. It offers products and patents applications for agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and others.
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