DowDuPont Names Its Three Planned Spin-off Companies
As part of a post-merger plan, DowDuPont has announced the corporate brand names that each of its divisions plans to assume once they are separated as independent companies. DowDuPont plans to spin off the companies in 2019 in keeping with the plan the company announced as part of the merger of The Dow Chemical Company and DuPont to form the combined company, DowDuPont. The companies completed their merger in August 2017.
DowDuPont now consists of three divisions: Specialty Products, Materials Science, and Agriculture and is dually headquartered in Midland, Michigan (former headquarters of The Dow Chemical Company) and Wilmington, Delaware (former headquarters of DuPont). The intended Specialty Products company, to be headquartered in Wilmington, Delaware, will become the new DuPont. The intended Material Science company, to be headquartered in Midland, Michigan, will become Dow. The intended Agriculture company, to be headquartered in Wilmington, Delaware, will assume the name Corteva Agriscience. The Materials Science Division is anticipated to separate by the end of the first quarter of 2019, and the Agriculture and Specialty Products Divisions are expected to separate by June 1, 2019.
“The Dow and DuPont teams have made incredible progress in six short months, and today’s announcement [February 26, 2018] is another demonstration of the unprecedented value creation potential of this historic merge and spin transaction,” said Andrew Liveris, executive chairman of DowDuPont, in a company statement.
The largest spin-off company by revenue will be the intended Material Science company (the new Dow). It consists of several businesses: performance materials and coatings: industrial Intermediates and infrastructure: and packaging and specialty plastics. It had $44 billion in 2017 pro forma revenue and $9.1 billion in 2017 pro forma operating earnings before taxes, depreciation, and amortization (EBITDA).
The intended Specialty Products company (the new DuPont), which includes the company’s excipients business, will be the next largest spin-off by revenue. It consists of several segments: nutrition and health; industrial biosciences; electronics and imaging; transportation and advanced polymers: and safety and construction. It had 2017 pro forma revenue of $21 billion and 2017 pro forma EBITDA of $5.3 billion.
The intended Agriculture company (Corteva Agriscience) consists of the company’s seed and crop protection business. It reported $14 billion in 2017 pro forma revenue and $2.6 billion in 2017 pro forma operating EBITDA.
The company said that certain product names will change at separation, but many products within each intended company will continue be sold under their current brand names. Additional brand development work for the intended Materials Science company and the intended Specialty Products company is ongoing.
At its 2017 earnings announcement on February 1, 2018, the company said the timeline for the spin-off of the companies is proceeding ahead of schedule. The company originally expected the spinoffs to take up to 24 months from the merge date (August 31, 2017). The separations are now taking 14 to 16 months from the date of its earnings announcement, February 1, 2018. This provides the timeline of the Materials Science company separating first by the end of the first quarter of 2019, and the intended Agriculture and Specialty Products companies to separate by June 1, 2019. Also, on its earnings announcement, the company said that is increasing its cost synergy target from $3 billion to $3.3 billion.