DUPONT has agreed to sell a portion of its crop protection business to US chemicals firms FMC, as it seeks to satisfy the demands of European antitrust regulators for its mega-merger with Dow.
In exchange for DuPont’s cereal broadleaf herbicides, chewing insecticides, and its crop protection research organisation, FMC will hand over its health and nutrition business and US$1.6bn. The deal will make FMC the world’s fifth largest crop protection chemical company by annual revenue, estimated at US$3.8bn.
The European Commission has cleared DuPont’s US$145bn merger with Dow but ordered that certain parts of the business be sold to ensure the combined company does not stifle competition. DuPont has pushed back the date it expects to close its deal with Dow from the end of June to the end of August.
The crop protection business being sold to FMC generated US$1.4bn in revenue in 2016, and its assets include four active ingredient manufacturing facilities and ten regional formulation plants. FMC will also take control of DuPont’s R&D organisation, including the majority of its staff, its crop protection research headquarters in Delaware, 14 regional development labs, and a pipeline of 15 synthetic active ingredients currently in development, covering insecticides, herbicides and fungicides.
FMC said in a statement that the deal will increase the geographic spread of income from its existing crop protection business and will result in a significant increase of its presence in Asia and Europe.
FMC CEO Pierre Brondeau noted the significant changes seen in the crop protection sector in recent years. Mergers between players include Bayer agreeing to buy Monsanto for US$66bn and ChemChina’s US$43bn deal for Syngenta, both last year.
“By combining these high-value products and R&D capabilities with our own product portfolio, pipeline and formulation expertise, FMC will be able to serve our customers better and accelerate the pace at which we bring new solutions to the market,” said Brondeau.
Meanwhile, DuPont gains a health and nutrition business that made over US$700m in revenue in 2016 from two main segments: texturants as food ingredients and pharmaceutical excipients.
DuPont provided an update on the order of its deal with Dow, noting that it expects the combined company to be carved into three different businesses – materials, agriculture and specialty products – and spun off within 18 months, with the first being materials science.
DuPont CEO Edward Breen said: “This agreement with FMC is a win-win. 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.”
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