DuPont has entered into a definitive agreement with FMC Corporation to divest a portion of DuPont’s Crop Protection business and to acquire substantially all of FMC’s Health & Nutrition business.
The deal is expected to include buying FMC’s pill coatings plant in Newark and a portion of the Stine-Haskell research site, also in Newark.
The transaction includes $1.6 billion going to DuPont to reflect the difference in the value of the assets, including cash of $1.2 billion and working capital of $425 million.
FMC is also expected to make investments in its portion of the Newark research center that saw sharp cutbacks when DuPont eliminated 1,700 jobs in Delaware.
The divestiture will satisfy DuPont’s commitments to the European Commission in connection with its conditional regulatory clearance of the merger with Dow, according to a release.
A tentative deal with European regulators was announced earlier.
“We believe this agreement is an excellent outcome that serves the best interests of all stakeholders, including our shareholders, customers, and employees,” said Edward D. Breen, CEO of DuPont. “Our intended independent Agriculture company will continue to benefit from the combined, complementary strengths of DuPont and Dow, which will include greatly expanded offerings and a robust pipeline across seed germplasm, biotech traits, and crop protection to provide greater choice and innovation to growers around the world. At the same time, we are significantly enhancing our Nutrition & Health capabilities, a key area of growth and opportunity for the intended independent Specialty Products company.
“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,” Breen concluded.
The merger transaction is still expected to generate cost savings of approximately $3 billion and growth synergies of $1 billion.
Under the terms of the agreement, FMC will acquire DuPont’s Cereal Broadleaf Herbicides and Chewing Insecticides portfolios – including Rynaxypyr, Cyazypyr and Indoxacarb.
Also, FMC will acquire the DuPont Crop Protection research and development pipeline and organization, excluding seed treatment, nematicides, and late-stage R&D programs, which DuPont will continue to develop and bring to market, and excluding personnel needed to support marketed products and R&D programs that will remain with DuPont. The assets being divested generated revenues in 2016 of about $1.4 billion.
Following the divestiture, the Agriculture division of the merged company will retain crop protection assets, including a portfolio in corn and soy broadleaf and grass control, a robust cereal weed control portfolio, DuPont’s position in disease control, and Dow AgroSciences’ insecticide portfolio.
FMC’s Health & Nutrition business generated more than $700 million in revenues in 2016 from two main segments: texturants as food ingredients and pharmaceutical excipients.
The business can be bolted on to DuPont’s existing Nutrition & Health (N&H) business.
The transaction with FMC is expected to close in the fourth quarter of 2017, subject to the closing of the DuPont and Dow merger, in addition to other customary closing conditions, including regulatory approvals.
