Wed, Jul. 20, 11:28 AM
- DuPont (DD +0.6%) and Dow Chemical (DOW +0.9%) shareholders approve the merger of the two largest U.S. chemical companies at their respective special meetings, a key step in closing the deal before year-end.
- The next hurdle is winning antitrust clearance: The U.S. Department of Justice in February issued a second request for information on the merger, the companies notified China’s competition agency of the deal in May, and they filed with the European Commission last month.
- Within two years, the companies plan to split into three separate publicly traded companies focused on agriculture, material science and specialty products.
Tue, Jun. 28, 3:39 PM
- Dow Chemical (DOW -2.1%) and DuPont (DD -2.6%) are downgraded to Neutral from Overweight at J.P. Morgan, citing a lack of near term upside potential amid rising risks of contraction in the world's major economic regions, particularly Europe.
- "When recessions arise, oil demand contracts and oil prices decreases; plastics product prices and profit margins then move lower," writes JPM's Jeffrey Zekauskas, adding that under weakening economic conditions, the market likely will ask for a higher risk premium or margin of safety in investing in Dow.
- JPM sees a greater likelihood that Dow and DuPont can be purchased over the next year at comparable or lower share prices.
- The firm cuts its price target for Dow to $50 from $57 and lowers its price outlook for DD to $64 from $73.
Tue, Jun. 14, 3:59 PM
- The U.S. Department of Justice's antitrust division should carefully analyze Dow Chemical's (DOW -1%) proposed $130B merger with DuPont (DD -1.3%) to ensure it will not hurt competition in the farming sector, U.S. Sen. Grassley says.
- The veteran senator says in a letter to the DoJ that he was concerned the planned merger would "decrease competition in an agriculture sector that has already been subject to a number of waves of consolidation in recent years."
- Grassley, who chairs the Senate's judiciary committee and serves on the agriculture committee, in March asked for an assessment of the impact on domestic food security from ChemChina's planned takeover of Syngenta.
Thu, May 19, 11:48 AM
- A Monsanto (MON +4.9%) takeover by Bayer is considered "relatively unlikely" by Jefferies analyst Laurence Alexander, as he expects MON to object to the offer given its conviction in its R&D pipeline and longer-term competitive advantages.
- Alexander thinks shares of Syngenta (SYT -0.5%) and DuPont (DD -0.7%) could be pressured as regulatory scrutiny likely would intensify if MON gets acquired, and BASF (OTCQX:BASFY -1.4%) could fall on investor concerns of a potential counter-bid.
- But the analyst sees a potential MON takeover as positive for shares of Novozymes (OTCPK:NVZMY -0.1%) and FMC Corp. (FMC -0.7%), as "a further roll-up of 'specialty generic' agrichemical assets could entice capital, and FMC would be a plausible anchor for such an attempt."
- Jefferies rates MON as a Hold with a $95 price target.
- Now read Bayer investor "deeply concerned" about move for Monsanto
Thu, May 12, 3:37 PM
- Monsanto (MON +8.5%) remains sharply higher though off highs of the day, following headlines that Bayer (OTCPK:BAYRY -4.1%) and BASF (OTCQX:BASFY -1.7%) are considering a possible acquisition of the company.
- Financial Times reports that MON is interested in forming some sort of combination with the agrochemical businesses of either of the two companies but opposes any deal that would turn it into a division of a German company.
- Piper Jaffray analysts say the interest in acquiring MON is mere speculation, seeing a potential joint venture as a more likely outcome as "we believe Monsanto remains committed to building a chemistry business."
- J.P. Morgan believes Bayer would need to raise equity given the size of the deal, and thinks Bayer investors likely would be only lukewarm around the potential deal given limited accretion and investor desire for Bayer to strength its pharma pipeline following recent setbacks.
- Analysts say a MON takeover likely would draw intense scrutiny from global regulators already confronting an unprecedented wave of consolidation in the crop chemicals industry involving the likes of Dow Chemical (DOW +0.8%), DuPont (DD +0.2%) and Syngenta (SYT +0.4%).
- Now read Seed war sparked: Bayer and BASF to battle over Monsanto?
Tue, Apr. 26, 10:55 AM
- DuPont (DD +2.4%) says it expects the SEC's review of its proposed merger with Dow Chemical (DOW +2.2%) to be completed by the end of June, with the deal closing in October or November.
- "We're in great shape in all our filings in all the jurisdictions around the world - China, Europe, Brazil, obviously the U.S.," CEO Edward Breen said in today's earnings conference call; he did not say when he thought the Justice Department might finish its antitrust review.
- DuPont also says it plans to buy back $2B of shares in 2016, and make the repurchases after the shareholder vote for the deal, expected to be held after completion of the SEC review.
- Breen says DuPont's overhead is down to 1.3% of sales, closing in on his target of 1%, and that the company is on track with plans to eliminate $730M in annual costs this year, with Q1 corporate expenses down 44% from prior-year levels, and overall operating costs falling 7%.
- DuPont is higher after reporting better than expected Q1 earnings and raising its 2016 earnings outlook, citing a weakening of the dollar against most currencies.
- Now read Golden parachutes descend onto Dow, DuPont CEOs
Mon, Mar. 7, 6:21 PM
- DuPont (NYSE:DD) rose 2.4% in today's trade following reports that BASF (OTCQX:BASFY) is considering a bid for the company, even as DuPont prepares to merge with Dow Chemical (NYSE:DOW).
- "We just don't see it... BASF cannot come up with a more attractive offer" than the current Dow-DuPont deal, Bernstein analysts write, adding that BASF would struggle to raise the expected $72B for a takeover.
- Jefferies' Laurence Alexander notes that BASF has not done large-scale M&A since the end of the last decade, and its reported interest in a potential spoiler bid for DuPont "run aground" on BASF’s return on investment capital, disinterest in equity financing, and credit ratings.
- "The math is terrible for this," Bernstein's Jonas Oxgaard says, also noting that DuPont may be obligated to pay Dow a $1.9B termination fee if it breaks the deal.
- For his part, CNBC's Jim Cramer thinks a DuPont-BASF deal makes no sense "strategically or financially" for either company, although BASF could emerge as a buyer of certain assets Dow-DuPont may be required to divest in order to secure antitrust approval for their merger.
Fri, Mar. 4, 4:38 PM
- DuPont (NYSE:DD) +5.2% AH following a Bloomberg report that BASF (OTCQX:BASFY) is considering a rival takeover bid for the company.
- BASF is working with advisers and banks to examine the merits of making a counter bid for DuPont, which has agreed to a merger with Dow Chemical (NYSE:DOW), according to the report.
- BASF is said to have held talks with DuPont before the merger agreement with Dow, but the talks did not progress.
Wed, Mar. 2, 5:36 PM
- Syngenta (NYSE:SYT) enjoyed a late spike to pull shares near breakeven after WSJ reported that DuPont (NYSE:DD), under both former CEO Ellen Kullman and current CEO Edward Breen, had talked with the company about a takeover or merging its agriculture business.
- WSJ previously had reported that SYT and DuPont had discussed merging their ag businesses, but it was not known that DD had explored the possibility of buying the company outright.
- Separately, SYT and DuPont today announced the seed industry's first 50/50 joint venture to out-license genetics to U.S. and Canadian seed companies, with the potential to expand worldwide, and to cross-license certain corn and soybean traits that each company will market independently under their own seed brands.
- The agreement includes rights for SYT to market DuPont's new Optimum GAT herbicide tolerant trait, and DuPont receives a global license to SYT's insect resistance technology for European corn borer, corn rootworm and broad lepidopteran control.
Mon, Feb. 29, 5:48 PM
- Citigroup analysts P.J. Juvekar and Daniel Jester believe new DuPont (NYSE:DD) CEO Ed Breen is “making all the right moves" ahead of its merger with Dow Chemical (NYSE:DOW), but they are not ready to change their Neutral rating on the stock because of agriculture weakness and slower global growth.
- DuPont’s "new data-driven CEO" is drawing on his “turnaround and split” experience at Tyco by cutting costs and streamlining DuPont’s organization, Juvekar and Jester say, adding that DD needed to be more streamlined in its cost-structure as well as decision making.
- Breen says R&D projects were taking much longer to go commercial and that DuPont is now focusing on return-on-capital as a key driver for R&D; Citi notes the company has struggled with its R&D productivity for years.
Fri, Feb. 19, 9:16 AM
- DuPont (NYSE:DD) and Dow Chemical (NYSE:DOW) announce their post-merger site structure, saying two of the three units to be created and spun off will be based in DuPont's home town and one in Dow's home town.
- The specialty products unit and the agriculture unit, whose name will feature DuPont, will both be headquartered in DuPont's home town of Wilmington, Del., while the material sciences company will be based in Midland, Mich., Dow's current home, and will feature Dow in the company's name.
- The three-way split likely will occur 18-24 months after the merger closes, which is expected in H2 2016.
Wed, Feb. 10, 12:58 PM
- The proposed merger of Dow Chemical (DOW -0.1%) and DuPont (DD -0.3%), which prompted an upgrade at Bernstein a month ago, is now the subject of a more critical review at the firm, which calls the current merger structure "sub-optimal."
- The current structure will create three problems, the firm says: the $4B in synergies the companies have guided are unrealistic; Dow would remain an integrated commodity/specialty player - which the firm sees historically as one of the company's main impediments - DuPont's culture issues would not be resolved; and the DuPont-dominated "specialty products" business would be a shadow of DuPont, "basically waiting to be carved up and sold."
- Bernstein believes the Dow-DuPont split-up plan should be revised to form three focused agriculture, commodity and specialty chemicals businesses which would enable the resolution of the integrated structure at Dow, the muddled structure and diffuse accountability at DuPont, while also significantly increasing both cost and growth synergies.
- Dow is rated Outperform with a $64 price target; DD also is rated Outperform, with an $81 target.
Mon, Feb. 8, 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)
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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