“That said, when it comes to the possibility of DuPont breaking off with Dow in lieu of BASF, it is quite clear the juice is not worth the squeeze”. Both stories quote unnamed sources familiar with the matter.
Dow and DuPont agreed in December to a multipart transaction in which they would combine, cut costs and then split into three listed companies.
Although, “the German chemical producer hasn’t made a decision yet about proceeding with an offer”, speculation is high as Dow is down and BASF and DuPont climb on the day. As of press time, BASF representatives have not responded to a request for comment by the Daily News. A break-up fee of $1.9bn will apply to either party if they walk away from the deal. BASF also would need to pay a 30 percent premium to DuPont’s share price in December, which was more than $74 after the deal announcement, and it would probably need to issue equity at now depressed prices to avoid excess borrowing, he said.
It was during that meeting the DuPont board expressed interest in continuing discussions of a merger with Dow as well as the potential alternatives with Company 1.
DuPont Chairman and CEO Ed Breen met with the chairman of “a large, publicly traded chemical company” in Short Hills, New Jersey, on November 25 to discuss the purchase of DuPont’s agriculture business and other transactions, the March filing shows.
DuPont management later considered a possible cash/stock business combination with a different company, called Company 2 in the filings, but officials determined the transactions with Company 1 and 2 were “likely not actionable”. The firms’ almost equal market values and overlapping shareholders allowed them to structure the deal in a way that should avoid taxes on capital gains – a feat that BASF could struggle to match.
That could potentially throw a wrench in DuPont’s planned merger with Dow Chemical Co.
DuPont and Dow plan for their merger to close by the end of 2016, with a break-up into three separate businesses to follow.