Dow and DuPont get EU go-ahead

The $130bn mega-merger between US chemical giants Dow Chemical and DuPont has been given the go-ahead by the European Commission. Earlier this year, it was announced that the deal would be subject to an investigation from EU competition regulators due to antitrust concerns.

The Dow and DuPont deal is the first of three mega deals in the sector that the European Commission is looking into. It is expected that Brussels will clear the Syngenta and ChemChina deal over the coming weeks, while a decision on the Monsanto and Bayer deal will be made later this year. If all three deals are approved and successfully complete, the resulting three companies will control 62 per cent of the world’s patented seeds and pesticides.

Savings of $3bn are expected to be made by the deal, and the resulting company, DowDuPont, plans to split into three independent firms focusing on agriculture, materials and speciality products. While Dow and DuPont have received the green light from the European Commission, approval depends on both companies shedding specific areas of their businesses in order to satisfy competition concerns.

The investigation into the deal was prompted by concerns that the merger could result in reduced price competition as well as choice in the pesticides market. In addition, the European Commission investigated whether the union of Dow and DuPont would damage product innovation across the sector. This has been a particular concern for environmental activists, who feared that the deal would mean a lack of choice and diversity for farmers and the agricultural industry.

The European Competition Commissioner Margrethe Vestager commented that the decision to approve the deal was assurance that the merger would not harm “innovation for safer and better products in the future.” Speaking on the state of the sector, Vestager continued to say that the merger presents questions about “our daily bread” and farmers’ ability to choose “different seeds and pesticides in order to secure their crops” which the Commission takes “very seriously.”

The approval marks another hurdle that Dow and DuPont have overcome in what could be a lengthy process. It will be interesting to follow the merger as it progresses, and to monitor the similar deals between Syngenta and ChemChina, and Monsanto and Bayer as they face their own investigations.

Stay tuned to our blog for industry M&A analysis and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.

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