MOSCOW (MRC) -- Dow Chemical Co. and DuPont Co. face further delays to their plan to create the world’s biggest chemical company after the European Commission demanded more information about the USD59 billion tie-up, reported Bloomberg.
The European Union’s merger regulator "stopped the clock" in its in-depth investigation on Oct. 13, the watchdog said in an e-mail on Friday. This happens "if the parties do not provide an important piece of information that the commission has requested."
Dow-DuPont, the first of a trio of mega-deals reshaping the agrichemicals industry, is embroiled in an extended probe by the EU over concerns that the combination may reduce competition for crop protection, seeds and some petrochemicals. The EU is separately examining China National Chemical Corp.’s bid for Switzerland’s Syngenta AG.
The EU move is a re-run of a previous suspension that already delayed the regulator’s Dow-DuPont probe by nearly a month. The extra suspension led analysts at Sanford C. Bernstein & Co. to lower the probability of the deal closing from 85% to 75%.
"While we still believe the deal should close, it is becoming increasingly probable that the" commission "is slow-walking this deal," Jonas Oxgaard, a New York-based analyst at Bernstein said in a note. It "likely delays the closure of the deal date to sometime in late March 2017."
Dow said in a statement Friday that it always expected a "thorough review" and both companies are working with the EU and other regulatory agencies. The deal is expected to close in the first quarter of 2017, the company said.
Dow Chief Executive Officer Andrew Liveris said last month that the merger may be delayed until February from a planned closing late this year, as European antitrust officials take more time to consider potential competition issues in pesticides and crop seeds. Liveris said the value created by the deal made the wait worthwhile.
EU Competition Commissioner Margrethe Vestager has raised concerns that the agrichemicals industry is "quite concentrated already" and she’ll ensure that farmers have affordable prices and a choice of providers. EU lawmakers and environmental campaigners have been calling on her to block Bayer AG’s bid for Monsanto Co.
Regulators twice stopped the clock on their review of Halliburton Co.’s bid to buy oil-services rival Baker Hughes Inc. earlier this year, saying they needed more information from the companies. The firms abandoned the deal in May as the companies struggled to overcome antitrust concerns from the U.S., the EU and other regulators.
"Once the missing information is supplied by the parties, the clock is re-started and the deadline for the commission’s decision is then adjusted accordingly," the commission said.
As MRC reported before, Dow Chemical Co. and DuPont Co., two historic giants of U.S. industry, will join in an all-stock merger of equals that’s the first step in a plan to create three new highly-focused businesses. The deal, the largest ever in the chemicals industry, will create a USD130 billion company that combines products from both Dow and DuPont in the areas of agriculture, commodities chemicals and specialty chemicals to create the new businesses.
DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.
The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber. In 2014, Dow had annual sales of more than USD58 billion and employed approximately 53,000 people worldwide.