Chemical Giant Three, New Dow Focused Materials Waiting For Listing

If all goes well, three months later, the new Dow will be listed again, and it is destined to be totally different from the previous company that uses the same "DOW" as the stock code.

At the beginning of the new year, Dow, the former chief operating officer of the material board and Jim Fitlin, chief executive officer of new Dow, set the first stop of overseas visit in China. He was 57 year old as the new Dow leader in March last year. His first task was to split the company from the provisional consortium of Dow DuPont in accordance with the established plan and to be publicly listed on April this year.

At the end of 2015, Dow and DuPont announced the merger. The company was renamed "DowDuPont" (Dow Dow). In August 31, 2017, Dow DuPont completed the peer-to-peer merger and decided to complete a split and reorganization of three in the second quarter of 2019. It divided Dow DuPont into 3 independent listed companies: Dow, DuPont, and Codi agricultural technology TM (CortevaAgriscienceTM), respectively, engaged in chemical materials, special products and agricultural businesses.

Dow is only a temporary consortium.

Dow and DuPont were founded in 1897 and 1802 respectively. The merger of them led to the development of a chemical giant with a market capitalization of about $130 billion, the largest industrial acquisition in the history of the year. Dow DuPont ranked 147th in Fortune 500 last year.

For the great changes that have taken place in the past three years, Fitlin said that before the merger, Dow and DuPont had their own advantages in business. With the help of this spanaction, they had the opportunity to further improve, which is the primary reason for the two companies to choose the merger.

The most notable change brought about by the adjustment of the business combination is the birth of a new agro chemical company named "codwin", composed of Dow and DuPont agricultural plates.

After integrating Dow and DuPont's seed and crop protection business, Cody has the strength of the first echelon based on the global agro chemical industry. Its annual revenue is about $15 billion.

　 New Dow, new DuPont business layout gradually

DuPont and Dow will retain their original company name in accordance with the plan of splitting up and decoupling Dow Dow, but the business system is quite different from that before. The former will be targeted at special products while the latter will focus on material science.

New DuPont will take Dow's water treatment, electronic materials and food nutrition business, and the original DuPont plastic packaging plate will be spanferred to the new Dow name.

After the business move, the new Dow has led three major pillars: packaging and specialty plastics, industrial intermediate goods and construction, and high-performance materials and coatings. The company's products cover plastics, polyurethane and organosilicon.

New Dow will be the three largest company to spin off listed companies, but the operating income and personnel size will be less than before merger and split. According to the current business framework, new Dow's revenue in 2017 was $44 billion 800 million, down 19% from the previous one. The total number of employees is 37 thousand, about 2/3 before the spanaction.

If the merger of Dow and DuPont is for the purpose of strong cooperation, the subsequent breakup is intended to make the company more focused, which reflects the appeal of the capital market, especially the radical investors. Radical investors such as Trian Fund and Third Point LLC are important drivers of Dow and DuPont merger.

Three months later, the new Dow will be listed again.

In the next few years, new Dow's capital account expenditure will be reduced from $4 billion a year to $2 billion 800 million a year, a drop of 30%, due to the fact that its two major upstream chemical projects in the US Gulf of Mexico and Saudi Arabia were fully commissioned last year.

Fitlin said that the company will focus more on the downstream investment in the industrial chain in the future, and the basic materials produced by two major chemical projects in the United States and Saudi Arabia will be spanformed into products of higher value, and will be provided to manufacturers of terminal consumer goods such as automobiles, mobile phones and skin care products.

This strategy will also be applied to China. New Dow is building a silicone resin plant in Zhangjiagang, Jiangsu Province, which can be used as raw materials for products such as cosmetology and nursing. It will be put into operation in 2021.

After the disintegration of the agro chemical sector, the new Dow did not need to bear the high R & D expenses. According to the plan, the annual R & D expenses of new Dow will not exceed 2% of the total revenue, lower than the previous 2.9%. Fitlin said that if we calculate US $50 billion in revenue, we will have $1 billion for research and development of chemical materials. This figure will not be worse than before.

Prior to the implementation of the new Dow's plan, he faced a lot of tedious work, such as the real division of the company in the legal and tax sense, and the regulatory filing of the listing.

If all goes well, three months later, the new Dow will be listed again, and it is destined to be totally different from the previous company that uses the same "DOW" as the stock code.