Dow Chemical and Dupont, the number one and two chemicals companies, are merging to create a giant with annual revenues of $90 billion. Soon after the merger though the company will be divided into three parts: Dow, Dupont and a smaller company for specialty chemicals.
This is the future, Mr. Liveris told Handelsblatt: “If we had a mega-merger, you’d have a very diversified portfolio. But I think that time frame is ending.”
This is a hidden warning to his German rival BASF. Kurt Bock, the company’s CEO, recently told Handelsblatt it will continue to have a broader base. Mr. Liveris countered with agrochemicals as an example, as the cost of development keeps on growing. “You have to choose,” he said.
Mr. Liveris said investors had pressured Dow into the merger. Low interest rates were only adding to that investor pressure for acquisitions: “To use that cash, to have a project for 30 years return, there’s no investor who wants that, none,” he said.
While BASF may not face the same investor pressure because of a different shareholder structure, Mr. Liveris warned the competition could force a move instead. “BASF has to compete against a big competitor in Dow DuPont and new Syngenta with ChemChina owning it,” he said