Dow Dupont Porfolio Review

Targeted adjustments maintain and enhance value creation potential and further optimize competitive advantages of three industry-defining intended future companies

Midland, Michigan - - DowDuPont™ announced that its Board of Directors and management, with the assistance of independent advisors, have completed their comprehensive review of the portfolio composition of the three intended independent companies. The Board unanimously concluded 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 changes better align these businesses with the end-markets they serve, ensuring clear focus, market visibility, targeted innovation and stronger growth profiles, and better equip each to compete successfully as industry leaders.

The DowDuPont Board of Directors approved the changes based on: a thorough review led by the lead independent directors, which included recommendations provided by McKinsey & Company; a comprehensive business and operational analysis leveraging knowledge gained over the past 20 months of pre-merger planning; and input from a wide range of stakeholders, including both investors and financial advisors. As a result of this comprehensive analysis, DowDuPont will realign the following businesses to the Specialty Products Division from the Materials Science Division:

Dow’s Automotive Systems’ adhesives and fluids platforms
Dow’s Building Solutions business
Dow’s Water and Process Solutions business
Dow’s Pharma and Food Solutions business
Dow’s Microbial Control business
DuPont’s Performance Polymers business
Several silicones-based businesses aligned with applications in industrial LED, semiconductors, medical, as well as Molykote^® brand lubricants for automotive and industrial equipment and Multibase Inc, which provides solutions for the thermoplastic compounding industry

On a forecasted 2017 basis, the businesses that will be realigned to the Specialty Products Division account for total net sales of more than $8 billion and operating EBITDA of approximately $2.4 billion, including approximately 40 percent of the heritage Dow Corning EBITDA. Relative to the original merger agreement, the adjustments are as follows:

Approximately $4 billion of net sales from the heritage Dow portfolio, evenly split between the Consumer Solutions and Infrastructure Solutions segments; and
Approximately $4 billion of net sales from the heritage DuPont Performance Polymers business moving to the Specialty Products Division

“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,” said Andrew Liveris, executive chairman of DowDuPont, and chairman and CEO of Dow. “They bear out the clear results of a significant comprehensive analysis the Dow and DuPont boards undertook over the past many months, which benefited from a fresh look provided by independent, third-party external advisors, in particular McKinsey & Company. We built on the wealth of knowledge gained as both companies advanced our integration work together. These 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. As a result, both our Materials Science and Specialty Products divisions will be well-positioned to better anticipate and meet customer needs through focused innovation and technology development that will deliver accelerated growth from a broader suite of best-in-class products.”

DowDuPont reiterates its previously announced plans to achieve run-rate cost synergies of approximately $3 billion and approximately $1 billion in growth synergies.