Chemical giants Dow and DuPont given EU green light for merger

Front entrance of Dow Chemicals in King's Lynn

Front entrance of Dow Chemicals in King's Lynn - Credit: Archant

EU authorities have given a merger between Dow and DuPont the green light despite initial concerns that a tie-up between the American chemical giants would stifle competition across Europe's pesticide market.

The European Commission (EC) said it conditionally approved the $130bn (£103bn) deal, given plans to divest 'major parts' of DuPont's international pesticides business, including its global research and development (R&D) organisation.

Dow, which has a plant at King's Lynn, and Dupont also intend to spin into three independent publicly traded companies following their merger.

EU competition commissioner Margrethe Vestager said: 'Pesticides are products that matter, to farmers, consumers and the environment. We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment.

'Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future.'

An in-depth review was launched last year amid concerns that it could have reduced competition in both the pesticides and petrochemicals market across the European Economic Area (EEA), and had the potential to stifle innovation between companies in the pest control industry.

The commission was worried that only three global players, BASF, Bayer and Syngenta, would be able to compete with the merged company on a global level when it came to R&D.

Most Read

But the EU said its competition concerns were addressed 'in full', though US authorities are still examining the deal.

DuPont and Dow said in a statement: 'The companies believe the outcome of the EC review is pro-competitive and maintains the strategic logic and value creation potential of the transaction.'

The firms said they would 'continue to work constructively with regulators in the remaining relevant jurisdictions to obtain clearance for the merger, which they are confident will be achieved.'

The Commission is currently conducting in-depth investigations into three other deals, including ChemChina's acquisition of Syngenta, HeidelbergCement and Schwenk's joint takeover of Cemex Croatia, and the proposed merger of Deutsche Boerse and the London Stock Exchange Group.