Dow-DuPont collaboration receives regulatory nod from China
Category: #world  By Dhananjay Punekar  Date: 2017-05-05
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Dow-DuPont collaboration receives regulatory nod from China

The Dow Chemical Company had recently proposed a merger of sorts with DuPont, the renowned American chemicals firm. The USD 130 billion deal has now officially been approved by the Chinese government subject to specific conditions, state reports.

The Dow Chemical Company already has a significant presence across the North American continent, with one of its chief subsidiaries, the Dow Water & Process Solutions, being a major player in United States agricultural waste water treatment (WWT) market. Through this merger, both, Dow Chemical Co. and DuPont aim to eventually develop a huge conglomerate that would accumulate shares in the electronics & telecommunication, health & nutrition, chemical, and agricultural sectors. For the deal to be finalized however, the companies required an authorization from the Chinese government.

The Dow DuPont deal had already obtained the consent of the European Union earlier this year, which has been touted as a remarkable achievement by experts from both the firms, given that acquiring regulatory consent from the EU is a relatively difficult landmark to cross. Having successfully crossed this barrier, analysts had stated that the seal of approval from China should not a major factor for the companies to worry about. The stock prices of both the firms also bore evidence to this prediction – Dow’s stock price dropped lesser that one percent, with each share being priced at USD 62.44. DuPont’s stock prices increased by 0.1%, with every share being valued at USD 80.

As predicted, China approved the merger, though a few conditions were laid out in front of both the companies, which are reportedly similar to those outlined by the European Union and had been agreed upon by both the firms in unison.

To obtain the regulatory permissions from the EU, DuPont had agreed to sell a part of its crop protection business along with its related research activities such as nematicides and seed treatment programs, to FMC Corporation, a reputed Philadelphia-based firm. In turn, FMC’s nutrition & health business unit, was sold to DuPont for a reported value of more than USD 1.5 billion. Dow, on the other hand, is on board to relinquish its acid copolymers and ionomers unit.

The Chinese authorities stated that for the deal to be approved, they required both the firms to supply and distribute specific formulations and insecticide and herbicide ingredients in China for more than half a decade post the closing of the deal. This has probably been done keeping in perspective the changing dynamics of the agriculture market, which has recently been characterized by separate merger mania.

The companies are now awaiting the regulatory approval from other countries such as Canada, Australia, Brazil, and the United States. Sources state that the DuPont Dow merger is likely to close around August. Once sealed, both the agrochemical-based magnates will collaborate to form DowDuPont, a behemoth that is slated to partake in agriculture, telecom, nutrition, and several other markets. It has also been revealed that a couple of years post the deal, the operations of this joint venture company will be bifurcated into three independent firms that would be on the public stock exchange market.



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Dhananjay Punekar

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Dhananjay Punekar

Dhananjay Punekar presently develops content for a slew of portals, including Market Size Forecasters and Algosonline. A post graduate in mathematics and business administration, he worked in Infosys BPO Limited prior to switching his professional genre. As a content wr...

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