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Tuesday, 18 April 2017

EU conditionally Dow–DuPont merger

To satisfy competition concerns, DuPont will its swap crop protection R&D assets for FMC’s nutrition business The European commission has conditionally approved the mega-merger of Dow and DuPont, though DuPont has been told to sell off its pesticides business to avoid competition concerns. Scientist examines oilseed rape (canola) trials Source: © iStock Despite DuPont being compelled to sell off significant parts of its crop protection research, the merger could still give rise to US competition concerns in crops like oilseed rape The commission worried that the merger would reduce competition on price and choice for existing pesticides and retard innovation. Just three other companies are globally active throughout the entire R&D process, from discovery to sales – BASF, Bayer, Syngenta. The commission’s investigations showed that Dow and DuPont were competing head-to-head in a number of important crop protection research areas. Hence it has ruled that most of DuPont’s global pesticides R&D organisation must be divested. Specifically, DuPont’s herbicides for cereals, oilseed rape, sunflower, rice and pasture were noted, along with insecticides for fruit and vegetables. All tangible and intangible assets underpinning the divested products, including manufacturing plants, must also be sold. To satisfy these requirements, DuPont has agreed an asset swap with agricultural and food materials firm FMC. It will trade its crop protection business, including R&D capabilities, for all of FMC’s health and nutrition business. FMC will also pay DuPont $1.2 billion (£960 million) in cash, plus $425 million in working capital. FMC will acquire DuPont’s cereal broadleaf herbicides and chewing insecticides, plus DuPont’s crop protection R&D pipeline and organisation, excluding seed treatment, nematicides, and late-stage R&D programmes. DuPont will continue to develop and bring these to market. ‘They are slicing and dicing the activities of DuPont,’ says Peter Carstensen, competition law expert at the University of Wisconsin in Madison, US. ‘There are subsets of herbicide and pesticide business, which raises questions about whether FMC will get a viable set of assets. Another key question is whether it is well-positioned to handle the technology.’

Source: Royal Society of Chemistry