EC clears Dow-DuPont merger subject to conditions 

Brussels – DuPont Co.is divesting its Crop Protection Business and acquiring FMC's health and nutrition business in order to win the European Commission's approval for its merger with Dow Chemical Co.

On 27 Mar, the European Commission approved under the EU Merger Regulation the proposed merger between US-based chemical companies Dow and DuPont.

The approval was, however, conditional on the divestiture of Dow's acid copolymer production facilities in Spain and the US, as well as divestiture of major parts of DuPont's global pesticide business, including its global research and development organization.

The Commission said Dow and DuPont's activities overlap in certain petrochemical products, specifically the combined market shares of the two companies in the acid copolymer market.

There, argued the Commission, the number of competitors would have been reduced from four to three.

The Commission also had concerns due to the strengthening of DuPont's dominant position in the ionomer market—products widely used in packaging and adhesive applications. The European body proposed that Dow will divest its two manufacturing facilities for acid co-polymers in Spain and in the US, as well as the contract with a third party through which it sources ionomers that it sells to its customers.

Additionally, the EC said the two companies' merger would raise concerns over innovation and competition within the pesticides market.

"Pesticides are products that matter—to farmers, consumers and the environment. We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment," said Commissioner Margrethe Vestager, in charge of competition policy.

The decision, she added, was to make sure that the merger "does not reduce price competition for existing pesticides or innovation for safer and better products in the future."

In response, DuPont announced the decision to divest a portion of its Crop Protection business to FMC Crop on March 31 to meet the requirements of the European Commission.

As a result of the asset-swap, FMC will pay $1.6 billion to DuPont to reflect the difference in the value of the assets. The divestiture, said DuPont, "will satisfy DuPont's commitments to the European Commission in connection with its conditional regulatory clearance of the merger with Dow."

"We believe this agreement is an excellent outcome that serves the best interests of all stakeholders, including our shareholders, customers and employees," Edward Breen, chairman and chief executive officer of DuPont, said.

DuPont said that its "intended" agriculture company will continue to be part of the business once Dow and DuPont merge, and will include "greatly expanded" offerings in areas such as seed germplasm, biotech traits, and crop protection.

"This agreement with FMC is a win-win," Breen said. "It is pro-competitive; it advances the regulatory approval process; and it maintains the strategic logic and value creation potential of our merger with Dow and the three independent companies we intend to create."