DuPont delays expected closing of merger with Dow Chemical

Bloomberg

DuPont Co. said it may need an additional three months to close its merger with Dow Chemical Co. as regulators around the world scrutinize a deal that would combine the two biggest US chemical makers. The updated timetable represents a change from the previous expectation that the transaction would be finalized in the first quarter of 2017.
“We look forward to closing the merger with Dow and are continuing to have constructive discussions with regulators in key jurisdictions,” DuPont Chief Executive Officer Ed Breen said in a statement on Tuesday. “We now expect the merger to close in the first half of 2017, pending regulatory approval.”
The companies are trying to resolve global antitrust concerns to complete a deal announced in late 2015 and originally scheduled to close by the end of last year. The European Union, which has questioned whether the combination could slow discovery of new pesticides, granted the companies a 10-day extension on Monday, setting March 14 as the deadline for review. The companies requested the latest delay to fine-tune a package of concessions.
DuPont ended its tradition of issuing a full-year earnings forecast because it expects the deal to close by mid-year. First quarter net income will decline about 18 percent from the prior year, partly due to an anticipated expense of 15 cents a share related to the merger, according to the statement. On an operating basis, first-quarter earnings will rise about 8 percent, DuPont said.

EARNINGS BEAT
In the last three months of 2016, earnings exceeded analysts’ projections amid cost cuts and increased sales of plastic auto parts and food ingredients. Adjusted earnings climbed to 51 cents a share, the Wilmington, Delaware-based chemical maker said in the statement. That compared with 42 cents predicted by analysts. Revenue fell 1.7 percent to $5.21 billion. Analysts had projected $5.32 billion, according to the average of estimates compiled by Bloomberg.
Sales declined largely because the company now sells agricultural products in the southern US directly to farmers rather than through third-party retailers, DuPont said. The performance materials units increased operating earnings by 47 percent as sales volumes climbed 7 percent on demand for engineered plastics used in autos. Earnings in the nutrition and health segment climbed 50 percent on cost savings and higher sales of sweeteners and probiotics.

COST CUTS
Earnings growth in the quarter was bolstered by a 9 percent reduction in operating costs. CEO Breen is eliminating 10 percent of the workforce under a plan to reduce annual expenses by $730 million ahead of the merger. Realized savings for the year were $750 million, DuPont said in a slide presentation Tuesday.