Dow’s $130 Billion Merger with DuPont
Deal Overview
Merging Parties: Dow Chemical Company (Dow) and E.I. Du Pont de Nemours and Company (DuPont)
Total Transaction Size: $130 Billion
Close Date: 31st August 2017
Company Details: Dow
Founded: 1897, Midland, Michigan (United States)
Founder: Herbert Henry Dow
CEO (At the time of Merger): Andrew N. Liveris
Dow was a global chemical company, recognised for its diverse portfolio of science-based products and solutions across the industrial chemicals sector. Dow specialised in performance materials, industrial intermediates, and electronics. With a strong emphasis on research and development (R&D), the company maintained a competitive edge through continuous innovation and global reach. The company became one of the largest chemical manufacturers in the world, with operations spanning over 160 countries. In 2017, Dow spent $1.6 billion on R&D activities, which constituted 2.9% of its sales and in the same year Dow’s innovation efforts were recognised when it won 10 R&D 100 Awards, a prestigious annual program honouring the top 100 revolutionary technologies introduced globally. Some examples of its award-winning technologies included Dow ComfortScience VORAZzz Foam, designed to improve moisture wicking and airflow in bedding applications and INNATE Precision Packaging Resins, which enhanced the strength and sustainability of flexible packaging. It was the sixth consecutive year that Dow’s products appeared on the R&D 100 list and this achievement highlighted Dow’s leadership in applied science and industrial innovation.
Company Details: DuPont
Founded: 1802, Wilmington, Delaware (United States)
Founder: Éleuthère Irénée du Pont
CEO (At the time of Merger): Edward D. Been
Originally established as a gunpowder manufacturer, DuPont became a leading company in the chemical manufacturing industry, known for its significant innovations and science-based products. The company was known for groundbreaking inventions such as nylon, Teflon, Kevlar and Tyvek. DuPont built a reputation for addressing complex challenges through innovation, with a strong emphasis on research and a robust intellectual property portfolio. For example, By the end of 2014, DuPont earned the 38th highest number of patents in that year (with 1,039 patents) from the U.S. Patent and Trademark Office. For example, DuPont pursued patents in biomass-based fuel production, food packaging technologies aimed at extending shelf life, and materials designed for electronic devices. In addition, the company put a lot of effort into R&D, with $1.9 billion dedicated to research in 2015. This sustained commitment to R&D reinforced DuPont’s role as a leader in chemical innovation and sustainability prior to the merger.
The Merger
The merger between Dow and Dupont was officially announced on December 11, 2015. The transaction was structured as an all-stock merger of equals, with a total estimated value of $130 billion at the time of the announcement. In this context, a "merger of equals" meant that both companies agreed to combine their operations on equal footing, with shareholders from each side receiving shares in the newly formed entity, DowDuPont. This structure reflected a balanced governance approach, with equal representation from both companies on the new board and shared executive leadership. For example, Dow’s CEO Andrew Liveris became executive chairman of DowDuPont (and then transitioned out of the role in 2018), while DuPont’s CEO Edward Breen served as CEO. This arrangement an example of a key characteristic in a merger of equals; mutual decision-making power and integration of leadership, as opposed to a traditional takeover.
The deal formally closed on August 31, 2017, after receiving final regulatory clearance in multiple jurisdictions including the US, the EU, China and Brazil. The newly formed entity was named DowDuPont Inc., and it became the world's largest chemical conglomerate by sales at that time.
From the beginning, the Dow/DuPont merger was structured as a temporary combination, with the stated goal of separating the merged entity into three independent, publicly traded companies, each focused on a distinct business sector. The separation took place in stages over 2019:
Dow Inc., specializing in Materials Science, was spun off in April 2019;
Corteva, Inc., focused on Agriculture, was spun off in June 2019; and
The remaining entity, DuPont de Nemours, Inc., retained the Specialty Products segment.
Each of the three successor companies became individually listed on the New York Stock Exchange (NYSE).
Regarding the three companies’ performance on the NYSE, Dow’s stock has declined by 27% over the past three months, and its Return on Equity (ROE) for the trailing twelve months ending March 2025 stands at 2.2%, which is low compared to the industry average of 11% and could be due to the company’s flat earnings over the past five years. Additionally, over the last five years, Dow’s market capitalization has decreased at an average rate of -7.36% annually.
Corteva’s stock has risen by 153% over the past five years, reflecting strong growth and over the same period, the company experienced a 48% growth per year in its compound earnings per share (EPS). When dividends are included, Corteva’s total shareholder return (TSR) over this period reaches 168%. TSR gives a more complete picture of investor gains than share price alone, as it accounts for dividends and other forms of shareholder value.
DuPont’s stock has risen by 19% in recent months, showing a modest rebound, although it remains below its 12-month peak. The stock is currently trading at a price-to-earnings (P/E) ratio of 37.09x, significantly higher than the industry average of 19.35x. The P/E ratio compares a company’s share price to its earnings per share and is commonly used to assess whether a stock is over or undervalued. In this case, the elevated ratio suggests DuPont could be trading at a premium, possibly reflecting investor optimism about its future.
Legal Considerations
Given the scale of the merger and the global significance of the merging parties, the transaction attracted close scrutiny from competition authorities, most notably in the US and the EU. Large-scale mergers usually attract closer scrutiny because they are more likely to affect multiple sectors and a wide range of consumers and businesses, increasing the risk of anti-competitive effects such as higher prices, reduced consumer choice or less innovation. In this context, competition refers to the market environment where independent companies compete to provide better prices, quality, and innovation to consumers and in order to maintain healthy market dynamics, competition authorities seek to identify and prevent its potential anticompetitive effects.
In the EU, the merger was not approved outright because based on the Significant Impediment to Effective Competition (SIEC) test under the EU Merger Regulation (EUMR), the European Commission (EC) had identified serious competition concerns in three key areas: price competition in existing pesticide markets, innovation in crop protection R&D, and overlaps in certain petrochemical products, especially due to the high combined market shares of the two companies in the acid co-polymer market.
The European Commission (EU’s competition authority) ultimately approved the deal in March 2017, subject to a comprehensive set of remedies and commitments to address its competition concerns. DuPont agreed to divest key pesticide products and nearly all of its global crop protection R&D division, ensuring that a buyer could maintain competition in both market presence and innovation. Dow committed to divesting petrochemical assets, including manufacturing facilities and supply agreements, to safeguard competition in that segment.
The approval of the Dow/Dupont merger by American authorities was also conditional and dependent upon specific divestitures to address antitrust concerns. The U.S. Department of Justice (DOJ) approved the Dow/DuPont merger in June 2017, following an in-depth investigation and subject to a targeted divestiture package to address specific antitrust concerns under the Clayton Act. The DOJ identified significant horizontal overlaps in the markets for broadleaf herbicides and insecticides, where the merger would have eliminated direct competition. To resolve this, the DOJ required DuPont to divest its Finesse herbicide and Rynaxypyr insecticides, and Dow also had to divest its U.S. acid copolymers and ionomers business.
Divestiture: Preferred Structural Remedy in Merger Control
Merger remedies are measures imposed by competition authorities to address and prevent the harm to market competition that may arise from a proposed deal. By eliminating these concerns, remedies enable the approval of transactions that might otherwise have been prohibited. There are two main categories of commitments: there are structural remedies which aim to reshape the market structure itself to preserve or enhance competitive conditions. In contrast, behavioural remedies focus on regulating the conduct of the merging parties, typically by imposing obligations to act, or to refrain from acting in specific ways that address the identified competition concerns.
As mentioned, the EC’s clearance for the merger to go through was conditional upon the divestiture of major parts of DuPont's global pesticide business, particularly its global R&D organization. Divestiture refers to the partial or full disposal of a company’s division, business line or other assets to other entities and it is a common structural remedy in merger control cases. Structural remedies and divestitures are often preferred because they directly and permanently address competition concerns and eliminate the potential anticompetitive outcome. In contrast, measures of behavioural remedies require ongoing monitoring and enforcement, which can be complex and costly for antitrust authorities. It is clearly stated in the EU’s notice on acceptable remedies that structural remedies “are, as a rule, preferrable” and that divestitures are “the best way to eliminate competition concerns”. not only regarding horizontal overlaps, but also certain in cases dealing with vertical or conglomerate concerns.
In addition, Innovation was a major area of concern in the Dow/DuPont case. The divestiture of R&D assets was aimed at ensuring that competition in innovation would not be harmed post-merger. This is consistent with the EU's general approach of considering both pricing competition and non-price elements such as innovation competition in merger analysis.
The US also prefers divestitures as a structural remedy, and it is stated in the “Statement of the Federal Trade Commission's Bureau of Competition on Negotiating Merger Remedies” that the commonly used remedy for anticompetitive concerns (especially for horizontal mergers) is divestitures. However, unlike the EC, the DOJ did not impose broader commitments aimed at addressing concerns about long-term innovation competition in the crop protection sector and did not require divestiture of DuPont’s or Dow’s wider R&D pipelines or integrated innovation platforms. The DOJ clearly stated in a press release that “Like the European Commission, the Antitrust Division examined the effect of the merger on development of new crop protection chemicals but, in the context of this investigation, the market conditions in the United States did not provide a basis for a similar conclusion at this time.” This marked a notable divergence from the EU’s approach to assess post-merger effects on competition.
Objective Convergence vs Subjective Divergence
The Dow/DuPont merger serves as a clear example of how merger control can lead to both convergence and divergence in remedy approaches across jurisdictions (specifically the US and the EU). Both authorities exhibit what can be described as objective convergence, meaning that they share a general and traditional preference for structural remedies, particularly divestitures, when addressing antitrust concerns. However, there remains subjective divergence, in the sense that the authorities can target different assets and focus on different areas of competitive harm for the same merger and ask for different remedies, even though they share a general preference for divestitures. This is a reflection of the distinct legal frameworks and enforcement philosophies at play. The EC applied the SIEC test, which allows a more flexible and forward-looking assessment, including an in depth focus on concerns about the loss of innovation competition, even in the absence of immediate price effects. The American. approach, by contrast, requires more concrete evidence of likely harm to competition, primarily focusing on overlaps in specific product markets with measurable effects. The DOJ did not address broader innovation concerns and instead centred its remedy package on divestitures tied to actual overlaps in herbicide markets.
Legal Implications
This case illustrates how divergent remedy requirements can emerge in large-scale and transatlantic mergers, even when there is cooperation between agencies. Divergent remedy requirements refer to the differences in the specific actions and remedies that competition authorities require from merging parties to address antitrust concerns for the same merger. There may be convergence around broader principles, such as the general and traditional preference for structural remedies like divestitures, which may be preferred because they provide a clear and definitive resolution to competitive concerns without the need for ongoing monitoring, however, divergences in the scope, rationale, or design of specific commitments remain. These differences often stem from distinct enforcement philosophies and competition law goals in each jurisdiction, various legal cultures, and differences in geographical markets. Traditionally, the EU focuses on preserving market structure and preventing excessive concentration to protect competition in the long term. The US, on the other hand, emphasizes more on economic efficiency and price effects, aiming to protect consumer. These different approaches to competition law; in general, could lead to a different assessment of potential post-merger effects and as a result, different remedies may be demanded for the same merger. While these are the traditional philosophies, it is important to recognize that competition law approaches can evolve over time, especially with the rise of new markets and changing economic conditions. The divergence could increase transaction costs, create legal uncertainty for the merging parties, and ultimately prolong the merger review timeline.