Volume 94 Issue 9 | Latest News
Web Date: February 19, 2016

DowDuPont picks Delaware as headquarters for agriculture business

Cost-cutting: Leaders expect the combination to save $1.3 billion
Department: Business
Keywords: agriculture, crop protection, merger
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King of Corn
The combined Dow and DuPont agriculture firm, with headquarters in Delaware, will be the leading seller of corn seed in the U.S.
Credit: Jason Johnson, USDA NRCS Iowa
20160219lnp1-corn
 
King of Corn
The combined Dow and DuPont agriculture firm, with headquarters in Delaware, will be the leading seller of corn seed in the U.S.
Credit: Jason Johnson, USDA NRCS Iowa

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.

 
Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society
Comments
Anonymous (Mon Feb 22 06:59:02 EST 2016)
Headquarters in Wilmington, but R&D and everything else in Indiana and Iowa. Sounds like Dupont Crop Protection R&D personnel at Stine Laboratory in Newark, DE are going to be laid off or relocated to Indianapolis.
Melody Bomgardner (Mon Feb 22 13:30:18 EST 2016)
I suspect that a significant research component will continue in DE for the ag business. I'm looking into the state and county incentives, but they include hiring incentives and money to invest in facilities. Delaware Gov. Markell stressed the research climate and educated workforce in his pitch to DuPont. Here's his presentation (PDF) http://inde.delaware.gov/Dedo_downloads/Delaware_Agriculture_17Feb16.pdf
Anonymous (Mon Feb 22 14:57:11 EST 2016)
I'm skeptical. It is my understanding that construction of that 134,000 ft2 facility ($35 million price tag) was halted in late 2015. It is also my understanding that it was a Pioneer facility, and the Pioneer presence in Wilmington was wiped out in the last 2 months. Of approximately 250 Pioneer employees in Wilmington, about 200 were laid off and the remaining 50 or so were told they had to relocate to Iowa or leave the company. The press releases from Dow-Dupont, not Markell, state that the headquarters will be in Wilmington, R&D elsewhere.
Melody Bomgardner (Wed Feb 24 13:24:54 EST 2016)
You may be right, statements have been vague about how much R&D would happen/remain in DE. That is a lot of R&D layoffs for one location to bear.
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