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Agriculture » DuPont and DOW Set To Merge

DuPont and DOW Set To Merge

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In December 2015, two of the world’s largest chemical conglomerates, Dow and Du Pont, announced a merger. The combined business, DowDuPont, brings together more than 300 years of invention, innovation and business acumen. Du Pont invented Kevlar 213 years ago, while Dow has been the maker of plastics and chemicals for 118 years. Although the new company will have a combined market capitalisation of US $130 billion, the goal is to split into three separate public companies in the next two years.

Advantages of the Merger

According to Du Pont’s CEO, Edward D. Breen, and his counterpart at Dow, Andrew Liveris, the merger is the culmination of long-term plans. The two companies have worked together before, creating DuPont-Dow Elastomers (1996 -2005), which sold products like synthetic rubbers and neoprene.

News of the merger was met with a 12% rise in share value, and shareholders of each company are expected to have ownership of half of the new entity and reap the benefits of a US $3 billion reduction in costs and potential growth synergies of US $1 billion.

DowDuPont will have a strong market share in the areas in which it will operate, and when it divides into three new companies in 2018, its combined materials business will become second in the industry, while its stake in the agricultural chemicals business will become the world’s largest.

Greater Focus – Larger Market Share

The three specialised companies will be in the areas of agricultural chemicals, plastics and other materials and speciality products. The new pure-play crop protection and seed agriculture company will be the third of its kind and will surpass current leaders Monsanto. It will benefit from DuPont’s current position in the global agrochemical market.

The Material Science company, which has early performance figures of US $51 billion, will combine Dow’s Performance Plastics, Performance Materials and Chemicals, Infrastructure and Consumer solutions with DuPont’s Performance materials.

The US $13 billion Speciality Products company is expected to drive technology-driven advances in areas like nutrition, industrial biosciences, electronics and communications.

The Effects on Agricultural Recruitment

DuPont has already announced its intention to cut 1700 jobs, and there is an expectation of further workforce reductions for both companies. The merger has prompted an executive search, however, to fill management positions in the three new companies. Although the split is two years away, the companies have already formed teams to design the separation and, says Breen, who leads the agriculture and speciality products committee, the major focus is on finding the right people.

In meeting the intention to fund innovation that offers greater choice and competitive pricing and ensures continued growth, the merger and creation of the three successor companies is expected to have a longer-term positive effect, especially on agricultural recruitment. Bringing the two entities together and creating a new business culture will mean cuts and a search for new talent, but both represent changes for agriculture recruitment.

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