The Dow Chemical Co. announced this week that it has entered into a definitive agreement with CITIC Agri Fund to divest a select portion of Dow AgroSciences' corn seed business in Brazil for $1.1 billion.
The scope of the divestiture includes seed processing plants and seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand and a license for the use of the Dow Sementes brand for a certain period of time. The assets being divested generated revenues in 2016 of approximately $287 million.
The divestiture is intended to satisfy Dow’s commitments to Brazil’s Administrative Council for Economic Defense (CADE) in connection with its conditional regulatory clearance of the proposed merger with DuPont. The divestiture will be conditioned on Dow and DuPont closing their merger transaction, in addition to other customary closing conditions, including approval of the divestiture transaction by CADE.
“Today’s announcement further advances the regulatory approval process and maintains the strategic logic and value creation potential of our merger with DuPont and the three independent companies we intend to create,” Dow chairman and chief executive officer Andrew Liveris said. “We believe this agreement serves the best interests of all stakeholders, including our shareholders, customers and employees. The combination of our portfolios, even with this divestiture, will create a much stronger agriculture company with greater choice and innovation for growers around the world.”
The established assets involved in this local remedy are incremental to the previously announced divestment of certain parts of DuPont’s global crop protection portfolio, research and development pipeline and organization and Dow’s global ethylene acrylic acid co-polymers and ionomers business, consistent with commitments already made to the European Commission and regulatory agencies in other jurisdictions.
Both companies said they are working together for a seamless transition for all stakeholders.
Dow and DuPont continue to work constructively with regulators in the remaining jurisdictions to obtain clearance for the merger and are making progress in fulfilling the requirements of the conditional approvals that have already been received.
The merger transaction is still expected to generate cost synergies of approximately $3 billion and growth synergies of $1 billion, and both companies have reaffirmed their expectation to close the merger in August 2017, with the intended spin-offs to occur within 18 months of closing.