Web Date: February 19, 2016
DowDuPont picks Delaware as headquarters for agriculture business
DuPont and Dow Chemical say the corporate headquarters for the agriculture business that will emerge from their merger will be in Wilmington, Del., where DuPont is now based. In addition, Johnston, Iowa, and Indianapolis, Ind., will serve as global centers for business leadership, R&D, and sales. The new company will have DuPont in its name.
The site plans will take effect after the merger of the two chemical giants, planned for the second half of this year. The merged company will then split into three firms focused on agriculture, materials science, and specialty products.
Wilmington will also be headquarters for the specialty products company. The materials science company will be based in Dow’s home of Midland, Mich., and feature the Dow name.
Leaders in both Iowa and Indiana lobbied Dow and DuPont heavily to make their state the agriculture headquarters. Iowa Senator Chuck Grassley, who is chairman of the Senate Judiciary Committee, voiced concerns that the firm would move out of Iowa, the home of DuPont’s Pioneer seed business, and threatened to hold hearings on the antitrust implications of the merger. Now, the state plans to move forward with tax credits to keep 250-500 research jobs in Johnston.
“Our deep presence in Iowa and Indiana will continue the close ties to our customer base and the broader agriculture community, while leveraging the existing corporate infrastructure and expertise we have in Delaware – DuPont’s home for more than 200 years,” said DuPont CEO Edward D. Breen.
Breen and Andrew N. Liveris, CEO of Dow, reiterated that they expect the combined agriculture firm to cut $1.3 billion in annual costs. In a recent conference call with analysts, Breen said the savings would come from marketing more products to the same customers, combining R&D programs, and moving DuPont to Dow’s enterprise technology platform.
The $19 billion-per-year combined company will be a formidable competitor to Monsanto and other large agriculture firms. It will be the largest seller of seeds for both corn and soy in the U.S. In addition to Pioneer, the firm will have leading crop protection products from both firms and Dow’s new Enlist herbicide resistant traits.
But the firm will need to adopt new technologies to succeed after it’s spun off, according to Laurence Alexander, chemicals analyst at the investment bank Jefferies. In a note to investors, he says the focus after 2018 will be on digital platforms, biological products, and targeted gene editing.
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