Dow, DuPont to Review Breakup Plan After Merger

Dow Chemical Co. and DuPont Co. will reassess how the chemical giants plan to separate into three companies following their merger, after shareholders of both companies raised questions about the details of each new company.

The companies said on Thursday said that the combined DowDuPont's board of directors will launch "a comprehensive review" of the businesses that are slated to go into three planned spinoffs after the deal's closing, including another look at cost-reduction plans and the timeline for the spinoffs.

The plan came as they also named the new directors on Thursday

Andrew Liveris, currently Dow's chief executive and chairman, will serve as executive chairman of the merged DowDuPont from the closing of the deal, expected by September, through April 1 next year. Mr. Liveris had originally been expected to retire this summer, but is staying on to see the deal he long sought through.

The planned review of the businesses comes as the combination nears its closing, after being held up longer-than expected by antitrust reviews. The boards had previously portrayed the split work as completed, barring a few minor tweaks. But throughout the delay, a debate has simmered among directors and among investors if the original plans for how to execute the three-way breakup were the best for the remaining companies.

Dow and DuPont in December 2015 unveiled their megadeal that the companies pitched to investors as a precursor toward separating the combined entity into three independent companies focused on agriculture, industrial materials, and specialty products like solar-panel components.

But some analysts and investors had questioned the distribution of the companies' businesses across the three planned spinoffs.

The main concern, from shareholders including activist Trian Fund Management, a DuPont holder, and Third Point LLC, a Dow investor, has been the mix of businesses going to the planned materials business and the planned specialty business, people familiar with the matter said.

"It's at this point clear that investors overwhelmingly favor a change in how the companies will look after the spins," Bernstein analysts wrote in report this week. "The ideal outcome is a clean ag company, a clean commodity company, and then either a portfolio specialty products company or a breakup of the specialties into smaller companies that are up for sale."

The investors have pushed to make the materials business, viewed as Dow 2.0, into a pure petrochemical business, and move everything else to specialty, the people said. Dow's Mr. Liveris told investors at that company's annual shareholder meeting on Thursday that the materials business is likely to be "the first company out of the gate."

The companies spent weeks mapping out the breakup plan in late 2015, including in meetings with Trian, before announcing their merger and said the plan would be largely unchanged. They structured the merger to need two-thirds of the combined board to approve any change to the split.

The new details on Mr. Liveris' continued role also follow concerns raised by some analysts after Mr. Liveris in April left open the possibility of staying on longer than previously planned, as longer-than-expected regulatory reviews delayed the deal's closing. Third Point's Daniel Loeb previously had sought Mr. Liveris' exit, but the two now have a better relationship after agreeing to settle their disputes last year.

After serving as executive chairman, Mr. Liveris will transition to chairman of the combined DowDuPont's board through July 1, 2018, then retire. Jeff Fettig, CEO of Whirlpool Corp. and Dow's lead director, said Thursday the arrangement provides "continuity of leadership" during the transition.

Shares of Dow declined 1%, while DuPont shares were down 1.2%.

Write to Jacob Bunge at jacob.bunge@wsj.com and David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

May 11, 2017 11:58 ET (15:58 GMT)