DowDuPont announces the realignment of its post-merger plan

DowDuPont, the joint venture between chemical giants Dow Chemical Company and DuPont, has changed its post breakup plan pertaining to the opposition from a select number of shareholders to bring about changes in the corporate strategies. For the record, this deal between these two chemical behemoths has taken over 2 years to attain closure, subject to regulatory concerns. At the onset of September though, the successful completion of the partnership was announced by the authorized officials. A post-merger plan was then formulated in place, wherein the combined company was to be divided into three independent companies within eighteen months of merger.

Initially, the joint venture was to be divided into six independent publicly traded companies rather that three, but taking into account the adverse impact of several business units on the material science division, it was decided to split the merged enterprise into three companies revolving around agriculture, specialty products, and material sciences, respectively. The locations of the corporate entities had also been fixed – while the material science company would be established in Midland, the other two divisions would be established in Wilmington and Delaware.

Earlier, DowDuPont segregated a part of the revenue to each of the independent companies – so statistically, USD 19 billion was allotted to agriculture, USD 13 billion to specialty products, and USD 51 billion to material science. Now, after the company has announced the deployment of a reorganization strategy, several units from the material science division have been shifted to the specialty products company. This decision has led to the material science segment turning out to be a much smaller business than originally expected.

However, the company officials have declared that the rearrangement between specialty products and material science will add competitive advantage to the company in terms of revenue. The reorganizing strategy would be completed with the help of a third party external adviser. The company would be realigning businesses adding up to more than USD 8 billion in sales, from the material science domain to the specialty products division. DowDuPont strategical decision-making in the post-merger plan is likely to have a marginal impact on the overall chemical market.

Post the decision taken by the DowDuPont company to break up the post-merger plan, activist investors such as Third Point and Trian Partners have voiced their complete support for the initiative taken by DowDuPont. The enterprise is totally confident that these portfolio adjustments are likely to prove beneficial for all the shareholders over the coming years. Post the strategic integration of specialty products and material science divisions, the company plans to fulfill customer demands with heavy investments in technology developments and innovations.

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Sunil Hebbalkar

Sunil develops content for Market Size Forecasters. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development department before switching his professional genre. Following his technical writing skills, he ...

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