M&A | DowDuPont Bows To Pressure From Activist Investors

The company haschanged plans to split into three separate companies following the merger between Dow Chemicals and DuPont.

Seeking to avoid a drawn-out fight with activist investors, DowDuPont—created by the $156 billion merger between Dow Chemical and DuPont—has changed plans to split into three separate companies.

Days after the merger became effective in early September, DowDuPont said it would shift some operations in the proposed spinoff companies in response to shareholder concerns. Businesses that account for more than $8 billion in annual sales will move from the materials science division to the specialty chemicals unit.

The shift is designed to make materials science, which will operate under the Dow brand, more focused on commodity plastics and materials. The third spinoff company will sell agricultural chemicals and seeds.

As part of the realignment, DowDuPont will divide the old Dow Corning’s silicone business among the materials science and specialty companies. The business makes silicon-based products for the aerospace, automotive and electrical industries.

Activist investment funds Trian Partners and Third Point expressed their support for the new demerger plans, which were drawn up with the help of McKinsey. Glenview Capital Management, a minority shareholder, said the shift in assets was “an important first step,” and recommended share buybacks. DowDuPont said it would release plans for share buybacks and dividend payments in the next few months.