Dow and DuPont reviewing businesses as merger approaches

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Graphic courtesy of WHYY Newsworks.

Dow Chemical Company and DuPont disclosed that an international consulting firm has been hired to assist in a further review of the companies.

An activist shareholder and long-time critic of Dow and its CEO Andrew Liveris has suggested that additional spin-offs would unlock more value for shareholders. Liveris plans to step down after the merger.

Current plans call for the combined DowDuPont to divide into three publicly held companies. Two of the companies, including the key agriculture business, is slated to be based in Delaware.

According to a release, the boards of the two companies support a “comprehensive portfolio review for DowDuPont, which is intended to assess current business facts and leverage the knowledge gained over the past year and a half to capture any material value-enhancing opportunities in preparation for the intended creation of three industry-leading companies.”

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The boards jointly commenced the review and have engaged McKinsey & Co. to assist the companies in the assessment. The lead independent directors of each company are working together to oversee the process.

The DowDuPont Board is expected to review the results soon after the merger closes, a release stated.

“Dow and DuPont leadership are committed to maximizing the tremendous value creation potential of the merger and anticipated spins,” said Alexander (Sandy) Cutler, lead director of DuPont. “Our review will provide an in-depth look at the portfolio mix and alignment across divisions to ensure we capitalize on all value-enhancing opportunities. The output of the review will be an immediate focus for the DowDuPont Board following merger close. If the results of our review demonstrate there is net greater long-term value creation to be realized through a change in the portfolio, it will be pursued.”

The companies still expect to close the merger in August, with the spin-offs to occur within 18 months of closing.

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