Dow Sells US$1.1bn Chunk of Corn Seed Business to Satisfy Regulators
12 Jul 2017 --- As part of The Dow Chemical Company’s journey to merge with DuPont, the US multinational is divesting a portion of its Brazilian corn hybrid business to CITIC Agri Fund, a state-owned investment company in China, for US$1.1bn.
The divestment marks the continued progress in the proposed Dow and DuPont transaction, with Dow entering into a definitive agreement with CITIC Agri Fund for a purchase price of US$1.1 billion.
The scope of the divestiture includes seed processing plants and seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand and a license for the use of the Dow Sementes brand for a certain period of time.
The assets being divested generated revenues in 2016 of approximately US$287 million.
The divestiture is intended to satisfy Dow’s commitments to Brazil’s Administrative Council for Economic Defense (CADE) in connection with its conditional regulatory clearance of the proposed merger with DuPont.
It will be conditioned on Dow and DuPont closing their merger transaction, in addition to typical closing conditions, including approval of the divestiture transaction by CADE.
“Today’s announcement further advances the regulatory approval process, and maintains the strategic logic and value creation potential of our merger with DuPont and the three independent companies we intend to create,” said Andrew Liveris, Dow’s chairman and CEO.
“We believe this agreement serves the best interests of all stakeholders, including our shareholders, customers and employees. The combination of our portfolios, even with this divestiture, will create a much stronger agriculture company with greater choice and innovation for growers around the world.”
“The established assets involved in this local remedy are incremental to the previously announced divestment of certain parts of DuPont’s global crop protection portfolio and R&D pipeline and organization and Dow’s global Ethylene Acrylic Acid copolymers and ionomers business, consistent with commitments already made to the European Commission and regulatory agencies in other jurisdictions.”
Both companies are working together for a “seamless transition” for all stakeholders and continue to work with regulators in the remaining jurisdictions to obtain clearance for the merger.
The merger transaction is still expected to generate cost synergies of approximately US$3 billion and growth synergies of US$1 billion.
The merger is expected to close in August with the intended spin-offs to occur within 18 months of closing.
Last month FoodIngredientsFirst reported how both companies have received antitrust clearance from US Department of Justice for the proposed merger of equals which means the two global chemical companies have already cleared that hurdle and allayed the regulators competitive concerns.
