The EC said both parts of the deal, which are to the Dow/DuPont merger divestment commitments, will clear under the EU Merger Regulation – meaning that FMC's proposed acquisition of parts of DuPont's crop protection business and DuPont's acquisition of FMC's Health and Nutrition business will go ahead.
As part of the proposed $130 billion mega-merger deal between Dow and DuPont, DuPont committed to divest major parts of its global crop protection business, including its global research and development organisation.
FMC will now be clear to acquire that part of the business – based on a commitment that FMC will divest existing herbicides.
The second part of the deal sees will see FMC will sell its Health and Nutrition business to DuPont – based on a new commitment from DuPont to sell off its current alginates business.
The Commission said that clearance of DuPonts acquisition of the FMC Health and Nutrition business is conditional on the divestment of DuPont's global alginates business.
Alginates are used as stabilising, thickening or gelling agents in both food and pharmaceutical products.
“The Commission had concerns that the transaction, as originally notified, would have strengthened FMC's dominant position on alginates for use as pharmaceutical excipients and would have significantly reduced competition for food applications by eliminating an important competitor (FMC) in the EEA market,” said the European Commission in a statement.
As such, the new commitment by DuPont to divest its alginates business addresses the concerns.
“DuPont offered to divest its global alginates business, including all tangible and intangible assets for the sourcing, development, manufacturing, packaging or sale of alginates,” said the EC.
This includes DuPont's manufacturing plant located in Landerneau, a licence to use DuPont's Grinsted Alginate brand for a certain period of time, as well as DuPont's pectin-alginates mixtures.
Crop protection deal
In addition to DuPont’s sell-off of its alginate business, clearance of the proposed acquisition of DuPonts crop protection business by FMC will be conditional on the divestment of FMC’s sulfonylurea and florasulam herbicides businesses in the European Economic Area (EEA).
In order to confirm the DuPont deal, FMC has now offered to divest its sulfonylurea and florasulam businesses in the EEA through exclusive licences to thifensulfuron-ethyl, tribenuron-ethyl, metsulfuron-ethyl and florasulam – including mixtures with other active ingredients – and the necessary personnel to run these businesses.
“The Commission had concerns that the transaction, as originally notified, would have allowed FMC to unilaterally raise prices in a number of national markets in the EEA by eliminating a close competitor (DuPont),” said the EC. “The commitments offered by FMC address these concerns.”
Dow-DuPont merger closer?
The conditional clearance of the DuPont-FMC swap deal, based on the above additional divestments of alginates and herbicides businesses, also brings the proposed mega-merger between Dow and DuPont one step closer.
The $130 billion deal with Dow Chemical had initially been expected to close in the first half of 2017 but has been pushed back after the European Commission only granted conditional regulatory clearance based on DuPont’s divestment of its crop business – something that will now be achieved with the closing of the FMC deal.
With all deals now gaining conditional approval from the European Commission, and a clear indication of all divestments needed for all of the deals in the chain to complete, the final closing of the Dow-DuPont merger edges one step closer.
DuPont chairman and CEO Edward Breen previously said the agreement with FMC is a ‘win-win’ for all companies involved.
“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 and the three independent companies we intend to create,” he said.