Brussels close to approving $140bn Dow-Dupont tie-up
Busy week for antitrust authorities as Deutsche Börse-LSE deal expected to be blocked
Brussels is set to deliver its verdicts on two big corporate deals this week with authorities expected to bless the $140bn union of US agrichemical giants Dupont and Dow Chemical while formally vetoing the €29bn merger of the London Stock Exchange Group and Deutsche Börse.
In a busy week for competition authorities in Brussels, the move to merge Dow Chemical with Dupont to create one of the world’s largest integrated crop protection and seeds companies is expected to win approval, according to people close to the process.
Both sides regarded European antitrust clearance as a significant hurdle to their deal, one of three planned megamergers set to reshape the global agribusiness industry.
An agreement by Dupont and Dow Chemical to sell assets including research and development capabilities have mitigated the primary concern of Margrethe Vestager, the EU antitrust commissioner, that the deal would cut innovation in crop protection products — the chemicals farmers use to kill pests, said the people close to the process.
However, Brussels will formally block the €29bn planned merger of the LSE and its German counterpart, ending a third attempt in 17 years to unite the financial hubs of London and Frankfurt, two people briefed on the cases said.
Several deadlines have converged to create the busy week. Brussels must rule on the exchanges merger by April 3 and the Dow-Dupont deal a day later, and has historically avoided leaving formal announcements until the last day.
Antitrust authorities also are expected to approve the second agrichemical megamerger — ChemChina’s purchase of Swiss-seed company Syngenta — in the following week, before its April 12 deadline, as it did not even issue formal objections to the deal during its in-depth investigation.
A third big agricultural deal, Bayer’s $66bn purchase of Monsanto, is also being scrutinised. It will start its European approval process before the summer.
The timings of the announcements by Brussels were complicated by the UK’s decision to formally trigger Article 50 to leave the European Union on Wednesday, the people added. Officials are keen to avoid a direct clash. Furthermore, Mrs Vestager is due at a public conference in the US on Friday.
The LSE and Deutsche Börse have expected a formal veto to their deal since the end of February when the UK group said it would not commit to Mrs Vestager’s demand that it sell MTS, an Italian bond trading venue, to assuage concerns about competition in fixed income markets.
Mrs Vestager had rejected an LSE proposal to insert non-compete clauses into the final package, according to three people involved in the discussions. Last week, the LSE restated that the commission was unlikely to clear the merger “based on its current position”.
Both exchanges have publicly committed to securing regulatory approval, but executives privately acknowledge the momentum behind the deal has all but died. The two are preparing for life as independent companies, amid tensions between senior executives on both sides over the breakdown of the deal.
For Dow-Dupont, approval is still needed from Chinese and US regulators if the companies are to close the transaction before July, as expected. The merger will combine Dow and Dupont and then spinout three new, more sector-specific companies: one focused on materials, the second on chemicals and speciality products and a third company concentrating on seeds and crop protection.
ChemChina’s $43bn purchase of Swiss-listed seed company Syngenta — China’s largest cross-border transaction — also has raised concerns in Brussels about competition in the crop protection chemicals markets. Those worries were allayed by an indepth investigation by antitrust authorities and approval is expected after Syngenta offered to sell business assets in Europe and the US.
Antitrust reviews are ongoing in China, the US, India and Mexico. However, the companies expect to close the deal by the end of June.