Shares of Dow and DuPont will cease trading at the close of the New York Stock Exchange on August 31. Shares of DowDuPont will begin trading on the NYSE under the stock ticker symbol “DWDP” on September 1.
The companies continue to expect the intended spin-offs to occur within 18 months of closing. The spin-offs included the key agricultural business, which will reportedly have DuPont in its corporate name. Two other enterprises will be collections of businesses of the two companies.
The future spin-offs have been the subject of controversy at Dow, with activist shareholders calling for more split-offs and/or asset sales to enrich shareholders.
The companies announced management consultant McKinsey was assisting in the process of recognizing opportunities to maximize returns.
Dominating their hometowns
The merger will combine two fabled industrial giants that dominated their hometowns in Michigan and Delaware for generations.
DuPont was founded in the early 1800s by a French immigrant family that opened a gunpowder mill along the banks of Brandywine Creek near Wilmington.
The company profited from the Civil War and went on to form what the government decided was an explosives monopoly. That resulted in the formation of Hercules and Atlas powder companies.
Dow, which is a century younger, grew in relative isolation in the small town of Midland, MI. after profiting from the extraction of bromide in the area. The company diversified into plastics, agriculture and other areas.
In the 20th century, DuPont became one of the nation’s biggest and most influential companies, with the family controlling General Motors until the 1950s. DuPont has paid a dividend to shareholders since the early years of the 20th century.
Growth and vast estates
The economy and culture of the time, as well as the lack of taxes on the wealthy in the early 20th century led to family members assembling estates, a few of which are now gardens and/or museums in what is sometimes known as Chateau Country to the north and west of the company’s headquarters in Wilmington.
The company’s hotel duPont was a social center for Wilmington and the family owned the local newspaper for decades.
Breakthroughs such as nylon that came out of the company’s Experimental Station bolstered its reputation as an innovator.
DuPont had the luxury of recruiting top engineers and scientists from the nation’s top universities with promises of job security and the opportunity to come up wth the next nylon.
DuPont employment in Delaware at one time totaled 25,000. It now is believed to stand at about 5,000 after numerous spin-offs, downsizings and asset sales.
The company had its ups and downs as the century progressed with Minnesota-born lawyer Irving Shapiro righting the ship in the 1970s.
Meanwhile family member Pierre, “Pete” duPont, was elected govrnor and helped turn around a nearly bankrupt state.
The Conoco era
The company made a pivotal purchase in a bidding war for oil giant Conoco, but ended up with the unsuccessful bidder, Canada’s Bronfman family, owning the largest single chunk of DuPont. While not always happy with the company’s performance, they did not attempt a takeover.
Conoco brought with it a brash oil patch culture that contrasted with the genteel and risk-adverse ways of DuPont. Clashes were said to be common.
Conoco was later spun off from DuPont, with the Bronfmans also departing as owners. But the company, minus Conoco, had fewer bets to hedge and became more vulnerable to shareholder pressure.
A global economy that cut into lucrative markets turned out to be a big threat to the company.
The global threat
In the 1990s, Woolard ordered cost cutting that ended what many believed to be a guarantee of lifetime employment that Conoco brass could not understand.
Woolard and his successors sold and spun off businesses, but did acquire Iowa seed giant Pioneer, which turned out to be a crown jewel of the company’s agricultural business.
Sales and investment shifted overseas as executives piled up the air miles.
CEO Chad Holliday, who earned positive press over the years, was not as highly regarded in other quarters for failing to outline a clear vision for the company.
The Breen era
Current DuPont CEO Edward Breen, who turned around and spllit up troubled conglomerate Tyco, joined the board of the DuPont in response to a proxy battle with activist investor Nelson Peltz.
While Peltz failed in his effort, Breen was later picked to succeed Holliday’s successor, Ellen Kullman, who was apparently forced out.
He went to work to cut costs at the company, eliminating 1,700 jobs.
Breen then resumed an off and on courtship with Dow, which under CEO Andrew Liveris was facing its own pressures from activist shareholders since an ill-timed purhase of blue chip Philadlephia-based chemical company Rohm and Haas during the 2008-2009 downturn.
Meanwhile, the cost cutting and some signs that DuPont was now a more hard-nosed, sales-focused business led to a turnaround in earnings that had eluded Kullman.
While Peltz went away, Liveris continues to face pressure from shareholders who want him to step down from his post shortly after the merger
Breen’s future is unclear as spin-off plans progress. Regardless of his future plans, Breen’s legacy has been set by both turning around DuPont and ending its more than two-century-long existence.
Whatever happens, Breen and Leveris wil walk away as much wealthier men, since share prices of both companies have risen since the merger was announced and stock options abound.