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Dow and DuPont delay their merger

The two firms promise to preserve R&D jobs to get European approvals

by Marc S. Reisch
January 30, 2017 | A version of this story appeared in Volume 95, Issue 5

Credit: DuPont
A photo of DuPont CEO Edward Breen.
Credit: DuPont

Both DuPont and Dow Chemical reported strong fourth-quarter earnings last week, but they also confirmed what most already expected: Their planned merger now won’t likely close until sometime in the second quarter this year.

Credit: Peter Cutts Photography
A photo of Dow Chemical CEO Edward Breen.
Credit: Peter Cutts Photography

The two were planning to complete their $130 billion union by March, but protracted negotiations with European Union officials about jobs and research in the combined entity’s crop protection business caused the latest postponement.

In a conference call with investors, DuPont CEO Edward Breen said Dow and DuPont are working on a “remedy package” to satisfy European authorities. Although he did not back off promises that Dow and DuPont would achieve cost savings of $3 billion in the combination, he said they “are not reducing at all the scientists that work on discovery and new product development.”

In his call with analysts, Dow CEO Andrew Liveris added that he was “confident” Dow and DuPont could solve their issues with the Europeans and that other country regulators would approve the deal once that happens.

For the quarter ending Dec. 31, DuPont reported a net income of $265 million, exceeding analysts’ expectations. In the fourth quarter of 2015, the firm had a loss of $253 million. Sales decreased about 2% to $5.2 billion.

Dow reported a net income of $1.1 billion before a $1 billion pretax charge for future asbestos-related costs, and other items turned that number into a $33 million loss. Dow’s net income for the quarter last year was also about $1.1 billion. Sales increased 14% from a year ago to $13 billion.


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