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Dow, DuPont merger wins U.S. antitrust approval

DuPont to shed Rynaxypyr insecticide assets in deal


Reuters — DuPont and Dow Chemical have won U.S. antitrust approval to merge on condition that the companies sell certain crop protection products and other assets, according to a court filing on Thursday.

The asset sales required by U.S. antitrust enforcers were similar to what the companies had agreed to give up in a deal they struck with European regulators in March.

The deal is one of several big mergers by farm suppliers, and the antitrust approval was quickly denounced by the head of the U.S. National Farmers Union, saying that farmers would face higher costs. The Justice Department, meanwhile, said the asset sales would prevent price hikes or lost innovation.

Dow and DuPont announced the deal in December 2015 in what was billed as an all-stock merger valued at $130 billion (all figures US$).

According to the filing in U.S. District Court for the District of Columbia, the assets to be sold include DuPont’s Finesse herbicide for winter wheat and Rynaxypyr insecticides, which the Justice Department said had U.S. annual sales of more than $100 million.

Rynaxypyr insecticides registered for use in Canada include Coragen, approved for use in cereals, canola, sunflowers and various vegetable crops, and Altacor, used in fruit and tree nut crops. Finesse, a brand not sold in Canada, is a combination of chlorsulfuron and metsulfuron methyl.

DuPont will also sell its U.S. acid copolymers and ionomers business. The products are used to make food packaging and other goods.

The president of the National Farmers Union, Roger Johnson, called the antitrust approval “deeply disappointing.”

“Clearly, the Trump administration is content allowing our country’s consolidation complex to continue,” Johnson said in a statement. “The combination of Dow and DuPont, coupled with other pending mergers… drives up costs for farmers’ inputs, and it reduces the incentive for the remaining agricultural input giants to compete.”

The Justice Department and Federal Trade Commission, which share the work of antitrust enforcement, have reviewed or are reviewing no fewer than four deals involving corporate titans that supply U.S. farmers.

In addition to the Dow and DuPont merger deal, Bayer has a deal to buy Monsanto, and ChemChina is purchasing Syngenta. Canadian fertilizer companies PotashCorp and Agrium are also planning a merger.

After Dow completes the merger with DuPont, the companies have said they would split into three separate companies specializing in material sciences, specialty products, and seeds and agrochemicals.

“As originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various specialty crops,” acting Assistant Attorney General Andrew Finch said in a statement, adding that the merged company would have also gained a monopoly over ethylene derivatives used to manufacture food packaging and other products.

Finch said the settlement “will preserve vigorous competition.”

Analyst Brett Wong of Piper Jaffrey said he did not foresee another round of consolidation in the agricultural supply business in the near future. “It’s going to take some time for the current dust to settle,” he said.

Dow and DuPont said in a statement on Thursday that the deal would create efficiencies worth $3 billion and growth synergies of $1 billion.

Dow and DuPont have already received clearance to merge from Europe, China and Brazil. They now await approval from just a handful of countries, including Canada and Mexico.

DuPont on Wednesday also noted the waiting period under U.S. federal antitrust law has expired on a related asset swap with FMC Corp.

That deal will allow FMC to buy up part of DuPont’s crop protection business, while DuPont buys “substantially all” of FMC’s health and nutrition business.

The deal with FMC is now expected to close in the fourth quarter of this year, DuPont said, pending completion of the Dow merger and other conditions.

— Diane Bartz reports on antitrust issues for Reuters from Washington, D.C. Includes files from Network staff.

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