Midland-based Dow Chemical Co. today announced a definitive agreement with CITIC Agri Fund to divest a select portion of Dow AgroSciences’ corn seed business in Brazil for a purchase price of $1.1 billion. The select portion includes seed processing plants, 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 limited period of time. The combined assets generated approximately $287 million in revenue in 2016.
Divesting the assets is meant to satisfy Dow’s commitments to Brazil’s Administrative Council for Economic Defence (CADE). The sale is contingent upon the approval of the company’s proposed merger with Wilmington, Del.-based DuPont and clearance of the divestiture 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,” says Andrew Liveris, chairman and chief executive officer of Dow. “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 assets involved in this divestiture are in addition to previous acquisitions, which consist of certain parts of DuPont’s global crop protection portfolio and research and development pipeline and organization and Dow’s global Ethylene Acrylic Acid copolymers and ionomers business. These previously announced assets are consistent with commitments already made to the European Commission and regulatory agencies.
Dow and Dupont continue to work towards the remaining conditional approvals for clearance of the merger, which is expected to generate cost synergies of approximately $3 billion and growth synergies of $1 billion. Both companies expect to close the merger this August, with the predicted results to occur within 18 months of closing.
