Divestments and an asset swap help DuPont, ChemChina clear regulatory hurdles
Two of the three megamergers occurring in the agrochemicals industry are taking major steps toward completion. DuPont has struck a deal that satisfies European demands concerning its merger with Dow Chemical, and ChemChina has started divesting assets to satisfy regulators assessing its acquisition of Syngenta.
To win EU approval for its merger with Dow, DuPont will sell a large portion of its crop protection business to FMC. In return, DuPont will receive $1.6 billion and FMC’s health and nutrition business. The Dow-DuPont merger has not yet been approved by U.S. antitrust regulators.
The asset swap will make FMC the fifth-largest crop protection chemical company in the world, with estimated annual sales of $3.8 billion. In the deal, FMC will get DuPont’s insecticides that control chewing and sucking insects on fruits and vegetables, including Rynaxypyr and Cyazypyr, which together are expected to generate $1 billion in sales in 2017. FMC will also get DuPont’s broadleaf herbicide portfolio for cereal crops.
Of longer-term importance, the deal transfers to FMC most of DuPont’s agriculture R&D footprint. The research organization is made up of a crop protection headquarters in Delaware, 14 regional labs, a research workforce, and regulatory staff. FMC also gets DuPont’s development pipeline of 14 active ingredients.
Overall, the DuPont crop protection businesses being sold represented roughly $1.4 billion in sales and $450 million in earnings in 2016. FMC says the products complement its broad-spectrum insecticide and pre- and post-emergent herbicide portfolios.