Dow Chemical announced on Tuesday that it has agreed to sell a portion of its hybrid corn seed business in Brazil to CITIC Agri Fund. The sale will allow Dow to secure Brazilian antitrust approval for its pending merger with DuPont, the company says.
Under the terms of the definitive agreement, CITIC is paying $1.1 billion for seed processing plants, seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand and a license for the use of the Dow Sementes brand for a period of time. These assets generated sales of about $287 million in 2016.
The sale is conditional upon merger close, which Dow still expects by the end of August, and approval of the deal by Brazil’s Administrative Council for Economic Defense. Dow says the assets in question are “incremental” to previously announced regulatory remedies, namely the divestitures of certain DuPont crop protection assets and related R&D to FMC and of Dow’s worldwide ethylene acrylic acid copolymers and ionomers business to SK Global Chemical (Seoul, South Korea).
Dow and DuPont expect to separate into three independent, pure-play companies within 18 months of the merger’s close. These companies will include a materials science company, an agriculture company, and a specialty products company.Andrew Liveris, Dow’s chairman and chief executive officer, says the CITIC deal advances the regulatory approval process and maintains the “strategic logic and value creation potential” of the merger and split. “The combination of our portfolios, even with this divestiture, will create a much stronger Agriculture company with greater choice and innovation for growers around the world.”
The companies have also received clearance from China, Europe, and the US, and are working constructively with regulators in the remaining jurisdictions. Dow and DuPont expect cost synergies of approximately $3 billion and growth synergies of $1 billion.
By Rebecca Coons
Source: Chemical Week
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