The European Commission signed off on the $130 billion merger between Dow Chemical (DOW) and DuPont (DD) Monday but insisted on the sale of the latter's pesticides business in order to ensure competition in the agrochemicals sector.
"Pesticides are products that matter - to farmers, consumers and the environment," said Commissioner Margrethe Vestager in a statement. "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."
Earlier this year, DuPont cautioned that its merger with Dow would hit earnings in the first three months of the year and that first-quarter sales would be largely flat from the same period a year ago in what it described as a "challenged" agricultural sector.
DuPont said the company's first-quarter earnings would include a charge of 15 cents a share for "transaction costs associated with the planned merger with Dow ... prior year GAAP earnings included a net benefit of 18 cents per share from significant items, primarily due to a gain on the sale of an entity."
"This regulatory milestone is a significant step toward closing the merger transaction, with the intention to subsequently spin into three independent publicly traded companies," DuPont said in a statement Monday. "The transaction is expected to create significant cost synergies of approximately $3 billion with the potential for $1 billion in growth synergies."
