MERGERS & ACQUISITIONS
Dow and DuPont detail merger talks Dow Chemical and DuPont have filed a prospectus for their planned merger with the Securities & Exchange Commission. The document reveals that the two companies, surprisingly, talked merger before Edward Breen took over as DuPont’s CEO last October and that both firms had other suitors that wanted to explore agricultural deals. Dow CEO Andrew N. Liveris met with Breen’s predecessor, Ellen J. Kullman, in New York City in November 2014, though the casual talks did not yield negotiations. Liveris and Kullman met again last May to discuss a possible merger of equals. A month later, Dow and DuPont executives elaborated on these discussions and also floated the possibility of a business swap.
Liveris and Kullman had other meetings in August and September where they discussed merging and then separating the combined company into two firms—one an agricultural chemical and seeds business and another that combined the rest of Dow’s and DuPont’s businesses. When Breen replaced Kullman last October, Dow and DuPont deepened the discussions. The talks gradually yielded the plan, unveiled in December, to merge the companies and subsequently separate them into three firms. But the companies were considering other options as well. DuPont explored acquiring a firm that in the filing is dubbed Company 1. Company 1 is described as a
firm “in the agricultural sciences industry” that had retained Goldman Sachs as an adviser on a “separate potential transaction.” Last year, Syngenta retained Goldman as its adviser in its takeover battle with Monsanto. DuPont was also approached by another firm, a “large, publicly traded” chemical company, about potential deals. The chairman of this company met with Breen in New Jersey. The company later floated the idea of a cash purchase of DuPont’s agriculture business and other transactions. Dow, meanwhile, was talking with two “agricultural sciences” firms as well as a large chemical maker interested in its agriculture business.—ALEX TULLO
START-UPS SPECIALTY CHEMICALS
Houston JLABS opens
Innovation landscape to shift A two-way analysis of innovation and business acumen at leading specialty chemical and materials firms shows considerable variation in companies’ abilities to create—and profit from—new and differentiated products. The competitive benchmark, developed by market research firm Lux Research, also illuminates the landscape for future deals that may spring from the merger of Dow Chemical and DuPont. Within the Lux matrix, DuPont scored significantly higher than Dow on the innovation scale. Accordingly, says Lux analyst Brent Giles, Dow’s agriculture business will be strengthened by DuPont’s ag research abilities when the two businesses come together. Innovation Entegris DSM Syngenta Monsanto 3M Evonik Corbion
DuPont Bayer
Platform Specialty Products
Toray
Solvay
Cytec
BASF
Dow
Eastman
Celanese Saint-Gobain
Huntsman Business execution
JOHNSON & JOHNSON
Note: Area of circle indicates relative annual revenue. Source: Lux Research
In contrast, DuPont’s industry-leading industrial biotech know-how will likely be a poor fit for the DowDuPont specialty products company. This “stranded” innovation capacity will be a ripe target for acquisition by other companies, Giles suggests.—MELODY BOMGARDNER
Johnson & Johnson Innovation, an arm of the big drug firm, has opened JLABS @ TMC in Houston. The fifth such life sciences company incubator J&J has created since 2012, the 3,200-m2 facility houses an initial 21 firms within the Texas Medical Center (TMC). Other JLABS facilities reside in the flashier locations of San Diego, San Francisco, and Boston. However, Houston has become an increasingly active life sciences hub. It’s home to more than 160 life sciences companies, and its institutions receive more than $1.8 billion in research grants annually, J&J says. With a $15 billion yearly budget, TMC is the world’s largest medical complex, according to a 2014 Texas state report. In Houston, Johnson & Johnson Like other JLABS has opened its fifth small company facilities, the Houston incubator. site can provide office and lab space, as well as operational, education, and business services. Unique to Houston is a medical device prototype lab with a three-dimensional printer. To outfit labs at the facility, J&J collaborated with the instrumentation company PerkinElmer. J&J is housing 116 companies across its five JLABS sites. It plans to open its first international one in Toronto this spring. With that addition, JLABS facilities will have capacity for 225 start-up companies. J&J points out that all the locations are accepting applications from biotech, pharmaceutical, medical device, consumer, and digital health companies.—ANN THAYER MARCH 7, 2016 | CEN.ACS.ORG | C&EN
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