Dow Chemical to divest part of Brazil ag business for $1.1bn

12 July 2017 14:13 Source:ICIS News

The DowDuPont merger awaits regulatory approval after shareholders voted to proceed with the dealHOUSTON (ICIS)--Dow Chemical has agreed to sell a "select portion" of the Dow AgroSciences' corn seed business in Brazil for $1.1bn to CITIC Agri Fund, the US chemicals major said in a statement late Tuesday.

The divestiture is intended to satisfy Dow's commitments to Brazil’s regulatory authority, the Administrative Council for Economic Defense (CADE), in connection with CADE’s conditional clearance in May of Dow’s planned $130bn merger with DuPont into DowDuPont.

The divestiture includes seed processing plants and seed research centres, 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 had revenues of about $287m last year.

Dow CEO Andrew Liveris said that the "strategic logic and value creation potential" of the DowDupont merger are being maintained, despite the divestiture.

"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," Liveris said.

The divestiture in Brazil is in addition to previously announced divestments of certain parts of DuPont's global crop protection portfolio and R&D pipeline and organisation and Dow's global ethylene acrylic acid copolymers and ionomers business, in line with commitments the companies made to the European Commission and other regulatory agencies to obtain clearance for DowDuPont.

Meanwhile, Dow and DuPont continue to work with regulators in the remaining jurisdictions to obtain clearance for their merger, which was first disclosed in December 2015, and they are making progress in fulfilling requirements of the conditional approvals that have already been received, Dow added.

The DowDuPont merger is still expected to generate cost synergies of about $3bn and growth synergies of $1bn, and both companies have reaffirmed their expectation to close the merger in August 2017, with the intended spin-offs of DowDuPont into three companies – material sciences, agriculture and specialty products - to occur within 18 months of closing.

By Stefan Baumgarten