US chemical giant DuPont said Friday it will sell some of its pesticide business to FMC to clear the regulatory hurdles to the merger with Dow Chemical.
However, the companies pushed back the closing date of their mega-merger.
DuPont will divest part of its crop protection business to FMC to comply with a ruling by the European Commission earlier this week clearing its $130 billion merger with Dow on the condition it unload “major parts” of its global pesticides business due to antitrust concerns.
In exchange, DuPont will receive the health and nutrition business from Philadelphia-based chemical company FMC along with $1.6 billion in cash and working capital.
“This agreement with FMC is a win-win. It is pro-competitive; it advances the regulatory approval process; and it maintains the strategic logic and value creation potential of our merger with Dow,” said DuPont chief executive Edward Breen in a press release.
FMC said the assets included industry-leading insecticides which are expected to generate over $1 billion in 2017 revenue, as well as a pipeline of products now under development and a network of manufacturing plants.
The deal also will significantly boost the company’s presence in Asia and Europe, catapulting FMC “into a tier-one ag technology company,” said FMC chief executive Pierre Brondeau.
Dow and DuPont again amended their agreement to push back the closing date of the merger to August, rather than the first half of the year as initially planned.
“This revised agreement was necessary and a very positive outcome driven by the transaction with FMC, announced by DuPont today,” Dow chief executive Andrew Liveris said in a joint-statement with DuPont.
“It is another significant milestone in our progress to complete this value-creating transaction.”
The union of two of the oldest US companies, originally announced in December 2015, has been heavily scrutinized by antitrust regulators globally.
The EU also required Dow to sell two plants in Spain and in the US, with German giant BASF widely seen as a potential buyer.
After the merger, Dow and DuPont intend to split up into three companies within 18 months. The first spin-off will be the Material Science Company.
Shares of FMC shot up 14.7 percent $70.49 in morning trading. DuPont fell 0.8 percent to $81.00, while Dow Chemical shed 0.4 percent to $63.96.
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