Mother Nature late last month stole some of the spotlight from a momentous event in the history of plastics and chemicals markets.
The much-anticipated merger of industry titans Dow Chemical Co. and DuPont Co. became official on Aug. 31. But the attention of the industry, and most of the world, was on the Texas coast, where Hurricane Harvey caused almost 50 deaths and knocked out a large chunk of the region's ability to make plastic resin and feedstocks.
The merger proceeded as planned, creating DowDuPont, a combination of two firms that had combined sales of $72 billion last year. The firm will be based in Dow's longtime home of Midland, Mich., and will be led by CEO Ed Breen of DuPont and Chairman Andrew Liveris of Dow.
But items emblazoned with the new name might be in short supply since the fledgling firm plans to split into three separate companies within the next 18 months. The largest of those three will include plastic resins and other materials. It will retain the Dow name and be based in Midland.
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 about $3 billion and growth synergies of about $1 billion. Dow's plastics history dates back more than 70 years, while DuPont's goes back even further, beyond 90 years. Today, Dow remains a world leader in polyethylene, while DuPont is a top producer of nylon and other specialty plastics. Both also have a substantial footprint in elastomers.
When the merger was first announced in December 2015, it sent shockwaves through the industry. Was this really happening? It was one thing for longtime players like Union Carbide (acquired by Dow) and GE Plastics (acquired by Sabic) to vanish in the last 20 years. But DuPont was nearly synonymous with the chemicals market through its many well-known products, including nylon.
"In 1802, E.I. du Pont de Nemours and Co. sprouted, like an acorn, close to the young oak of American life," Adrian Kinnane wrote in a DuPont company history published in 2002. The firm initially staked its claim as a supplier of explosives, including gunpowder, to U.S. manufacturers and to the young country's armed forces.