MOSCOW (MRC) -- Dow Chemical Co. and DuPont Co. won European Union approval for a USD77 billion merger, overcoming regulators’ concerns with hefty concessions, including the sale of large parts of DuPont’s global pesticide business, said Bloomberg.
The takeover, announced a year ago, is the first to win EU approval out of a trio of mega-deals that would reshape the global agrochemicals industry. The transactions, including Bayer AG’s plan to buy Monsanto Co. and China National Chemical Corp.’s agreement to buy Syngenta AG, would whittle down six industry players to three behemoths in America, Germany and China.
Dow and DuPont still need to win approval from the U.S., where the Justice Department is also expected to require divestitures to approve the tie-up, according to a person familiar with the matter. Timing on that decision, or what assets will need to be sold, isn’t yet clear. The EU and the U.S. are in "very close contact", EU Competition Commissioner Margrethe Vestager told reporters in Brussels on Monday. She didn’t know if the U.S. requirements "will completely match" hers.
EU approval was the biggest regulatory hurdle for the deal and the concessions required there “will likely be sufficient to appease U.S. regulators with respect to any concerns in the crop chemicals sectors,” said Jennifer Rie, an analyst for Bloomberg Intelligence in New York. "Some seed assets may need to be sold for approval, including corn and soybeans."
The EU said the combination could have halted work on new chemical products in areas where Dow and DuPont currently compete head-to-head. There was "specific evidence" that the pair would have cut back on the amount they spent on developing products, the European Commission said in an emailed statement. Only Bayer AG, BASF SE and Syngenta match the two firms in discovering, developing and selling agrochemicals.
"We always look at what a merger would change not just today but also tomorrow," Vestager said. "It is just as important to make sure" mergers don’t "reduce innovation for new and better products."
DuPont has agreed to divest "a significant part" of its existing pesticide business, including R&D activities. That covers herbicides for cereals, oilseed rape, sunflower, rice and pasture as well as insecticides used for fruit and vegetables. The sale includes plants where the products are made and relevant personnel. DuPont’s "global R&D organization" will mostly be sold too. Dow will sell two plants in Spain and the U.S. that make acid co-polymers.
MRC