Dow Chemical Co. and DuPont have won U.S. Department of Justice (DOJ) approval to merge on the condition that the companies sell certain crop protection products and other assets.
This agreement brings them one step closer to finalizing the so-called “merger of equals.”
“With this review completed, we are on track to close our procompetitive merger in a manner that maintains the strategic logic and value creation potential of the transaction,” Ed Breen, chair and CEO of DuPont, said in a recent joint news release.
Dow and DuPont announced the deal in December 2015.
The assets to be sold include DuPont’s Finesse herbicide for winter wheat and Rynaxypyr insecticides, according to the filing in U.S. District Court for the District of Columbia. The Justice Department said those assets had U.S. annual sales of more than $100 million.
Dow will sell its U.S. acid copolymers and ionomers business. The products are used to make food packaging and other goods.
After Dow completes the merger with DuPont, the companies have said they would split into three separate companies specializing in material sciences, specialty products and seeds and agrochemicals, according to Reuters.
Dow CEO Andrew Liveris emphasized recently that Dow’s Texas operations will see little effect from the merger. The Houston Chronicle reports one of the three splintered companies to retain the name Dow, would continue to own and run the Freeport complex, as well as DuPont’s facilities in Orange.
The other two companies will focus on agriculture and specialty products.
“As originally proposed, the merger would have eliminated important competition between Dow and DuPont in the development and sale of insecticides and herbicides that are vital to American farmers who plant winter wheat and various specialty crops,” acting Assistant Attorney General Andrew Finch said in a statement. Finch added that the merged company would have also gained a monopoly over ethylene derivatives used to manufacture food packaging and other products.
But Finch says the settlement will “preserve vigorous competition.”
Dow and DuPont have already received clearance to merge from Europe, China and Brazil. They are now awaiting approval from just a handful of countries including Canada and Mexico.
The companies maintain their commitment to closing the merger in August 2017 with any spin-offs happening within 18 months of closing.