DowDuPont merger promises to be a quiet event
By Roger Morris
Special to Delaware Business Times
Editor’s note: this article first appeared in the August 22 edition of Delaware Business Times
When the DowDuPont merger becomes final on August 31, it will mark a seismic change in the history of the 215-year-old Delaware company, yet there will be few outward indications that anything is different.
While there will be meetings of “commemoration” for employees, company officials said “no celebrations” are planned. There will be no immediate changes in corporate signage, and the DuPont oval will not suddenly become a Dow diamond. Employees, with few exceptions, will continue September 1 in the jobs they are currently performing for the foreseeable future. Customers will still call the same office numbers.
The new DowDuPont will have headquarters in Midland, Michigan, where Dow is located, and Wilmington, and it will be a holding company for three large business units that will begin operating separately and independently of the others late in 2018 or early 2019. According to DuPont, the holding company will have very few employees.
Current DuPont corporate or staff functions will in time be absorbed into the two business units that will remain in Wilmington, neither of which yet have formal names – Agriculture ($16 billion in sales) and Specialty Products ($12 billion). The largest of the three units, Material Sciences ($46 billion), will be headquartered in Midland, although some employees will remain in Delaware.
Dow’s Andrew Liveris will become executive chairman, and DuPont’s Edward Breen will be CEO. DowDuPont will trade under “DWPP.”
For more than two centuries, DuPont has been synonymous with Delaware, yet in many ways the merger will seem anticlimactic. DuPont, as former employees and neighbors have known it, has receded in recent years. Its benchmark textile fibers business was sold. Much of the chemicals business was spun off as Chemours. It gutted its famous research unit, and the corporate headquarters moved from the iconic DuPont Building to suburban Wilmington. And, for the first time in its history, DuPont has no manufacturing facilities in the state.
Nevertheless, for shareholders and top executives, the merger promises higher financial returns. The stock market has been looking favorably on the merger, and current stockholders will receive 1.282 shares in the new company for each share of DuPont stock. A study this summer showed that analysts rated DuPont as their No. 12 broker pick, on average, of the 30 stocks on the Dow Jones Industrial averages.
So far, there have been no announcements of planned layoffs and job redundancies as part of the predicted $3 billion in synergies the merger is expected to yield. Current employees, especially in staff departments, will also likely have concerns about if and where they will fit within the two Delaware-based units being formed, or whether they will be asked to transfer to Michigan. According to DuPont officials, some employees may have assignments both within the three new operating units that are forming as well as helping launch the new umbrella corporation.
For some of the 1,700 Delaware employees laid off in January 2016, including about 200 scientists in the Central Research & Development unit, the merger engenders mixed emotions.
“Everyone was pretty miserable” on the day of the layoff, says Steve Lustig, who was told he had to leave after 26 years with the company. “It was a destruction of value – people, lab equipment, projects being worked on – with nothing to show for it. Academic scientists lost their respect for DuPont.”
Lustig landed a tenured faculty position at Northeastern University in Boston, but he still hasn’t sold his house, and the family transfer from Wilmington has been delayed because he has a daughter at the University of Delaware. “But I ended up in a much better place than where I was,” he said.
Lustig said all ex-DuPont colleagues he knows have now found jobs – in consulting, in university teaching and research and with other chemical companies.
Some of those scientists now have working relations with a new company of 85 industrial scientists, most of them ex-DuPonters, called Stride, headed by non-DuPonter Seetha Coleman-Kammula. According to Coleman-Kammula, Stride has both nonprofit and for-profit arms and aims to provide expert services for any company who needs them – including, for some scientists, their former employer. “We have two sizable contracts already,” she says, “and I definitely think there will be opportunities with the new company [DowDuPont].”
DuPont management said that it has held meetings with local and state government to keep them apprised of the progress of the merger. Both state and local governments, through taxes, and local businesses, through consumer spending, are concerned with whether there will be a net increase or decrease in employment as the three business units realign resources between the two corporate headquarters.
But, to a certain extent, DowDuPont will not be the only local company retaining partial historical ties to those first powder mills along the Brandywine. Just as Hercules (now part of Ashland) did when it was spun off in 1911, Chemours management has touted its own direct link to the DuPont heritage – and now its employees will have a ringside seat to the massive repurposing of the company of which they were once a part.