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Dow, DuPont expect statement from EU next month

November 17, 2016
Energy & Chemical Value Chain

Dow Chemical and DuPont expect to receive a formal statement from EU antitrust authorities outlining objections to their proposed merger as early as December, according to a report in Bloomberg.

The report, citing people familiar with the European Union’s investigation, says the European Commission is set to send a statement to the two companies that month.

One issue of potential EU objection is R&D, according to Alan Riley, a senior fellow at think tank Institute for Statecraft (London, United Kingdom), quoted in the report. “They are both funding R&D in the same fields, so there is a real issue of innovation loss from the deal,” Riley is quoted as saying. Dow-DuPont is in bigger regulatory trouble than the Bayer-Monsanto and ChemChina-Syngenta agchems mega deals, according to Riley.

“The merger of equals between Dow and DuPont has slipped on delays with filings and more vocal regional concerns for implications on innovation,” says Laurence Alexander, an analyst with Jefferies (New York, New York). Alexander notes concerns about innovation overlap could “extend beyond ag R&D targets into functional overlaps and ambitions in packaging materials, biobased feedstocks, vehicle lightweighting opportunities, construction materials, [and] electronic materials.”

Jefferies expresses greater confidence in paths forward for the Bayer-Monsanto and ChemChina-Syngenta transactions, particularly the latter. “We still expect the acquisition of Syngenta by ChemChina to close for 465 Swiss francs/share,” Alexander says. Divestitures of “more commoditized product lines” could total more than $4 billion in sales, he adds.

For Monsanto and Bayer, herbicides—possibly including glyphosate—and cotton are possible areas for required divestitures, according to Alexander. However, the two companies have “ample time” to complete such divestitures, he adds.

In October, the EU suspended its review of the Dow-DuPont merger “over failure to provide requested information.” The review restarted on 7 November, but the deadline for its completion has been pushed to 28 February 2017. Dow and DuPont had originally aimed to close the merger by the end of this year. EU authorities are also conducting in-depth investigation into the ChemChina-Syngenta deal, which may not be completed until March of next year.

By Vincent Valk

Source: Chemical Week

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