ACCC approval for Dow and DuPont merger deal

AUSTRALIA’S competition regulator has fallen into line with the European Commission (EC), China and Brazil and will not oppose a $A169 billion merger of global chemicals giants Dow and DuPont.

The Australian Competition and Consumer Commission (ACCC) two weeks ago announced it will not oppose the proposed merger in Australia conditional on Dow and DuPont fulfilling divestment commitments of a 1000-page global merger plan agreed to by the European Union in March.

China and Brazil’s approval is also conditional on the divestment commitments being fulfilled to eliminate potential for the merged entity to control sections of specific markets, including some agricultural pesticide and herbicide, crop protection research and development and industrial plastics markets.

Competition regulators in the US and Canada have yet to approve the plan which would see the Michigan-based Dow and Willmington, Delaware-based DuPont merge.

Sections of the business would then be spun off to create separate publically-listed corporate entities concentrating on different market segments.

Dow and DuPont have told investors they are “confident” the merger will go ahead in August and the first of the spin-off companies, a material science company, will be floated within 18 months of the merger.

They have said the merger is expected to generate savings of about $3 billion through “cost synergies” and $1b of “growth synergies” and, after the spin-offs, leave the agricultural division of DowDuPont with “strong crop protection assets”.

These will include “an excellent portfolio in corn and soy broadleaf and grass control, a robust cereal weed control portfolio, DuPont’s strong position in disease control and Dow AgroSciences’ industry-leading insecticide portfolio”.

Dow has already announced an agreement to sell its global industrial plastics ethylene acrylic acid copolymers and ionomers business to Korean-based SK Global Chemical Co under the divestment commitments. DuPont has agreed to divest its broadleaf cereal herbicides and “chewing” insecticides portfolios and its global crop protection research and development organisation.

The ACCC launched an informal review last year and had concerns relating to the concentration of ownership of agriculture products.