Earlier this week news broke that Dow and DuPont were in advance merger talks to bring the two giant companies together into a single entity, then break them into three divisions. The early talk turned out true this morning.
Reuters is reporting that the two firms have agreed to merge in an all-stock deal.
The deal is going to face considerable regulatory scrutiny, but some in the industry argue that the agree-upon plan to split may make the challenges moot. Plans are to divide assets of the $130 billion merged company into three divisions – agriculture, materials and specialty products.
Catch up on some of the conversation about this merger from earlier coverage we offered this week.
According to wire sources, including a report in the Wall Street Journal this week, this merger and the eventual three-way split could evolve over the next few years, if allowed to move forward. Decline crop prices, as well as soft sales in other markets, have forced companies across the country to consider mergers.
For 2015, mergers and acquisition deals and offers have topped $4 trillion. While not all have gone through – Comcast-Warner Cable, and General Electric-Electrolux both failed this year – many are proceeding including the giant merger between Pfizer and Allergan.
In agriculture, there had already been market moves earlier this year when Monsanto an offer to buy Syngenta, and later sweetened the deal. Those offers were rebuffed, yet other potential buyers have sent offers to Syngenta, including a major Chinese chemical firm ChinaChem. Syngenta has turned down those offers too.
Meanwhile, the National Corn Growers Association said Friday morning the group would study impacts of the propposed merger.
"The National Corn Growers Association is committed to protecting the best interests of our members and our nation's corn farmers," said NCGA President Chip Bowling. "With respect to the proposed merger, we anticipate that we will have an opportunity to submit comments regarding the effect this merger may have on agricultural research, innovation, grain marketing, and the competitive pricing of farm inputs. We will do all we can to protect farmer interests and preserve an open and competitive marketplace."
Similarly, the American Soybean Association said in a press statment that it, too, would study the merger. "We welcome competition and innovation to the industry, while keeping the best interests of soybean growers at the forefront," said ASA President Richard Wilkins. "ASA looks forward to the opportunity to provide comments to the companies and U.S. regulatory authorities that must approve any merger, and will continue to study how this merger will affect soybean farmers."
The National Farmers Union, however, was not as welcoming of the merger, suggesting it could result in less competition, reduced innovation and "likely higher costs for family farmers."
"The federal government has shown its willingness to approve giant acquisitions and mergers that harm competition and the result has been a year of mergers resulting in fewer and fewer choices for family farmers and ranchers," said NFU President Roger Johnson. "The standard against which to measure any merger is whether it will increase competition in the marketplace, and almost certainly this merger will leave us with much less, not more, competition," he said.