What Does the Dow Chemical and DuPont Completed Merger Mean to You?

This long-anticipated merger of equals has been completed. The plan was first announced in December 2015. The newly formed company is being called DowDuPont Inc. This of course is just the first of a series of steps to come, as the newly formed company will divide itself into three companies along related product lines.

Merger Creates Three Companies

The name Dow will be used for the materials science company that will consist of most of Dow Chemical’s operating segments other than agriculture and electronic materials. DuPont’s engineering plastics business will also become part of this new Midland, Michigan-based company.  Dow and DuPont’s agriculture products businesses will form the basis of another new spinoff company based in Wilmington, Delaware.

The third company will consist of specialty products from both Dow and DuPont operations. These will range from Dow’s electronic materials segment to Dupont’s industrial biosciences and nutrition and health. This new company will also be headquartered in Wilmington Delaware.

So what does this mean? First, there is obviously a new giant in the competitive market. Once the three focused enterprises are formed for products ranging from chemicals to agricultural products to specialty products, there will be more pressure for the other companies that compete in those segments.

Operating Philosophies

From the operations perspective, Dow has been very focused for years on making its plants operate as efficiently as possible. This will no doubt be carried into the new company’s operations strategies. DuPont too has had a strong engineering team to make sure its plants operate well. Of course, it will take some time for the newly combined company to sort out the fine details as to which of these approaches at the detail operations level will be best for the overall company. This will potentially provide opportunities for suppliers of systems and software to be part of the new direction of the company.

It’s also likely to motivate other owner-operators to take a fresh look at their own operations. Determining whether your operations meet your business objectives is always important. But it is equally important to know if you are missing opportunities to improve your competitive position. ARC expects that many operating companies will want to assess their own respective operations in light of the merger. Sitting back and waiting to see if the new DowDuPont will gain market share is not a good approach.