DowDuPont's 3-way split: Corteva, Dow and DuPont
The merger between the two companies last year helped facilitate both companies reorganization.
DowDuPont's Agriculture Division, combining the former Dow Chemical and DuPont farm pesticide and genetically modified (GMO) crop-seed businesses, will be called Corteva Agriscience and spun off into a separate company, with about $14 billion in yearly sales, by June 1, 2019, the company said Monday.
The rest of DowDuPont will then split back into two companies: Dow, a $44 billion (yearly sales), materials company including most of the former Dow Chemical businesses and based at Dow headquarters in Midland, Mich.; and DuPont, a Delaware-based mix of former DuPont businesses, combined with similar Dow units, with sales of around $21 billion this year, the company said in a statement.
The new DuPont, as projected, will make and sell: automotive polymers; safety, military, and construction supplies; processed food ingredients and other "bioscience" materials; and electronics and imaging supplies.
A top Specialty executive on Monday said the group will "carry the DuPont name into the future": The reconstituted company will be an "innovation-driven specialty leader, drawing on expertise and assets from both heritage Dow and DuPont," Marc Doyle, the chief operations officer currently running the group for DowDuPont, said in a statement.
DowDuPont insiders and industry-watchers have speculated that some of the Specialty businesses may attract corporate buyers. Joking nicknames for the proposed company include the "Island of Misfit Toys" and "Kevlar to Cupcakes." Billionaire investor Dan Loeb had called on the company to sell or spin off those businesses separately, taking advantage of recent high prices for industrial businesses. But DowDuPont says they work well together.
Why did Dow and DuPont bother combining last summer in the first place, instead of just selling the ag groups? Though the original Dow was almost twice as large as DuPont, that combination was structured as a "merger of equals," avoiding U.S. income taxes on business sales.
As part of the merger, DowDuPont CEO (and former DuPont boss) Ed Breen and chairman (and longtime Dow head) Andrew Liveris cut billions in procurement, operations, management, research-and-development and other expenses from their companies. They also promised to dismantle the corporate bureaucracies some shareholders blamed for slow growth and weak profits.
On Monday, DowDuPont said Corteva will include a headquarters in Delaware, and large lab, office, and experimental field complexes at the former DuPont Pioneer Seed headquarters in Johnston, Iowa and the Dow farm-industries center in Indianapolis, Indiana. Corteva will also have pesticide factories, research, and sales organizations across the Americas, Europe, and Asia.
Delaware cut DuPont corporate taxes by $34 million a year to help hold onto the agricultural and DuPont-successor companies. But the two big Midwestern operations will serve as Corteva's Global Business Centers, with sales, support, supply, marketing, and R&D based at those locations.
The new Corteva name is a hybrid: "Cor" is Latin for "heart," and the Hebrew word "Teva," used by Israel-based drug and shoe companies, translates as "nature." Company officials pronounce it "kohr-TEH-vah." Corteva sells products that help commercial farmers "produce a secure supply of healthy food," said James C. Collins, Jr., the former DuPont farm sales chief who heads the Agriculture Division and is expected to run Corteva.
Corteva Agriscience will include the former DuPont Crop Protection (pesticides), DuPont Pioneer (seeds), and Dow AgroSciences businesses, including the Seed Technologies, Crop Protection, and Digital Agriculture divisions; plus research and development supporting the businesses. Brands include Pioneer, Mycogen, and Brevant seeds; Aproach Prima fungicides; and Quelex herbicides, among others.
DowDuPont unveiled the Corteva logo, with angular sets of blue and white bars resembling stylized farm crop rows formed into an arrow pointing left, at the Commodity Classic farm show in Phoenix, Arizona. The name was predicted by Andrew Alleman, of DomainNameWire.com newsletter, when he noticed DowDuPont reserving the names last December.
The former DuPont Co.'s 600-person Newark, Del. farm experimental station and several pesticide lines, with factories in the U.S. and other countries, were sold to FMC Corp. of Philadelphia to comply with European Commission guidelines designed to keep the pesticide business competitive amid a wave of mergers.
DuPont's previous spin-offs include locally-based Chemours (industrial chemicals, now based in Wilmington); Axalta (paints, Philadelphia); and Endo (opiates and other drugs, Malvern), among others.