MIDLAND, Mich.—Less than two weeks after its formal launch, DowDuPont is changing the makeup of the three firms that it plans to spin off.
The board of Midland-based DowDuPont said in a Sept. 12 news release that "in light of knowledge gained since the announcement of the transaction, certain targeted adjustments will be made between the Materials Science and Specialty Products divisions, which will enhance the competitive advantages of the intended resulting companies."
The board added that the changes "better align these businesses with the end markets they serve, ensuring clear focus, market visibility, targeted innovation and stronger growth profiles."
The changes mainly consist of moving several businesses from the proposed new materials company into the proposed specialty products company. The main plastics-related businesses affected by these moves are DuPont's performance polymers unit and plastics compounder Multibase.
Performance polymers includes DuPont's production of nylon, acetal, PBT, polysters, copolyesters and related materials. Multibase is a maker of thermoplastic vulcanizates (TPVs) and related produsts based in Copley, Ohio.
The businesses being moved are expected to post sales of $8 billion in 2017, split evenly between previous Dow and DuPont units. The DowDuPont board made the changes after a review led by independent directors, which included recommendations provided by McKinsey & Co. and input from a wide range of stakeholders, including both investors and financial advisors.
"Our DowDuPont Board is fully aligned and confident that these targeted portfolio adjustments are the right actions to take and will benefit all stakeholders over the long term," Executive Chairman Andrew Liveris said in the release.
The adjustments "are also fully supported by the Materials Science Advisory Committee, as they better align select businesses with the market verticals they serve, while maintaining integration and innovation strengths within strategic value chains," he added.
"The facts clearly supported the strategic logic of this portfolio configuration," CEO Ed Breen said in the release. "Each of the intended companies will have even stronger competitive positioning, high value-added customer solutions, and a distinct and compelling investment thesis."
DowDuPont began operations Aug. 31, after the merger of plastics and chemicals giants Dow Chemical Co. and DuPont Co. Those two firms had combined sales of $72 billion last year.
Plans for the merger were first announced in late 2015. That included splitting into three separate companies within the next 18 months.
The largest of those three will be focused on materials, including plastic resins. It will retain the Dow name and be based in Midland, where Dow had been based. The other two spinoff firms—one devoted to agriculture and the other to specialty products—both will be based in Wilmington, Del., where DuPont had been based.
The merger transaction is expected to generate cost synergies of approximately $3 billion and growth synergies of approximately $1 billion. Dow's plastics history dates back more than 70 years, while DuPont's goes back even further, beyond 90 years. Dow is a world leader in polyethylene, while DuPont is a top producer of nylon and other specialty plastics.