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Business

Delaware wins DowDuPont ag unit

After lobbying by three states, spin-off will be headquartered in Wilmington

by Melody M. Bomgardner
February 24, 2016 | APPEARED IN VOLUME 94, ISSUE 9

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Credit: Dow AgroSciences
Indianapolis, current home of Dow’s agriculture business, will retain research positions after Dow’s merger with DuPont.
Credit: Dow AgroSciences
Indianapolis, current home of Dow’s agriculture business, will retain research positions after Dow’s merger with DuPont.

Dow Chemical and DuPont 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 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.

Following the merger announcement, Delaware officials worked quickly on tax reforms and incentives to keep DuPont in the state. The package includes up to $9.6 million in grants for facility improvements and hiring. The county of New Castle is weighing $7.5 million in additional grants, according to a local newspaper, the News Journal.

Leaders in both Iowa and Indiana also heavily lobbied Dow and DuPont to make their state the agriculture headquarters. Iowa Sen. Chuck Grassley (R), who is chairman of the Senate Judiciary Committee, voiced concerns that the firm would leave 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 company will have leading crop protection products from both firms and Dow’s new Enlist herbicide-resistant traits.

But the agriculture company 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 data tools, biological products, and targeted gene editing.

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Comments
Tom Pahutski (March 3, 2016 8:21 AM)
Just trying to figure out what does Dow's enterprise technology platform mean?
Melody Bomgardner (March 6, 2016 8:43 PM)
Hi Tom,
Dow manages business operations and customer relations on a unified SAP platform. It is not an easy technology system to implement but allows a company to work much more efficiently than having separate systems.

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