Dow Chemical and DuPont have won European Union approval for a $77bn (€70bn) merger, overcoming regulators' concerns with concessions, including the sale of large parts of DuPont's pesticide business.
The takeover, announced a year ago, is the first to win EU approval out of a trio of mega-deals that would reshape the global agrochemicals industry. The transactions, including Bayer AG's plan to buy Monsanto and China National Chemical's agreement to buy Syngenta, would whittle down six players to three behemoths in the US, Germany and China.
The EU said the combination could have halted work on new chemical products in areas where Dow and DuPont currently compete head-to-head. "We always look at what a merger would change not just today but also tomorrow," EU Competition Commissioner Margrethe Vestager said. "It is just as important to make sure" mergers don't "reduce innovation".
DuPont has agreed to divest "a significant part" of its existing pesticide business, including R&D activities. That covers herbicides for cereals, oilseed rape, sunflower, rice and pasture as well as insecticides used for fruit and vegetables. DuPont's "global R&D organization" will mostly be sold too. Dow will sell two plants in Spain and the U.S. that make acid co-polymers.
In a joint statement they described the "regulatory milestone" as "a significant step toward closing the merger transaction".
Attention now moves to the US, where the Justice Department is also expected to require divestitures before approving the tie-up.
Environmental campaigners had renewed calls to block all three deals. (Bloomberg)