Dow Chemical and DuPont claimed to be on track to complete their merger in August after reaching an agreement with US antitrust regulators.
As part of the deal, DuPont will spinoff certain parts of its crop protection business while Dow is to divest its global Ethylene Acrylic Acid copolymers and ionomers business. The latter focuses on the chemicals used to make key plastics.
Dow and Dupont claimed the DoJ decision meant the merger was on track to be completed in August, with the spinoffs to be finalised within 18 months of the deal closing.
While the duo said the agreement with the US Department of Justice (DoJ) remained subject to court approval, the proposed divestures are in line with the pledges already made to European regulators.
Both sets of regulators had expressed concerns over the impact of the merger on the crop protection chemicals market as well as on the market for the chemicals used to manufacture flexible food packaging.
The agreement with the DoJ is a major breakthrough for the two firms, with the merger having been first mooted in 2015.
Receiving the necessary regulatory approvals has taken longer than hoped, so Dow and DuPont will be highly relieved to be able to count on the green light from the US authorities in addition to those already received from jurisdictions such as Europe and China.
Dow and DuPont reiterated that they expected the merger to create significant value through their plan to break up the enlarged group into three separate companies. They expect the $142bn merger to generate cost synergies of approximately $3 billion and growth synergies of around $1 billion.
Ed Breen, chairman and chief executive of DuPont, said the completion of the DoJ review meant the two firms would be able to complete the merger whilst maintaining “the strategic logic and value creation potential of the transaction.”
Breen claimed the separate businesses of the enlarged group would each become a “growth-oriented leader in attractive segments where global challenges are generating strong demand for their distinctive offerings.”
Dow chairman and chief executive Andrew Liveris said the DoJ agreement was a “significant step forward.”