Posted on 12/11/2015 8:40:44 AM PST by SeekAndFind
The chemical giants DuPont and Dow Chemical Co. agreed to merge in an all-stock deal valuing the combined company at $130 billion, with plans to eventually split into three.
The deal, which is likely to face intense regulatory scrutiny, allows the new company — to be called DowDuPont -- to rejig assets based on the diverging fortunes of their businesses that make agriculture chemicals and plastics.
Dow and DuPont have been struggling to cope with falling demand for farm chemicals because of falling crop prices and a strong dollar, even as their plastics businesses have thrived thanks to low natural-gas prices.
The companies said the proposed split would create businesses focused on agriculture, materials and specialty products. Dow and DuPont shareholders will each own about half of DowDuPont, excluding preferred shares.
DuPont CEO Ed Breen will be CEO of DowDuPont, and Dow Chemical CEO Andrew Liveris will be executive chairman.
"This transaction is a game changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders," Liveris said in a statement.
(Excerpt) Read more at businessinsider.com ...
TO TRANSLATE BUSINESS-SPEAK...
A large part of this transformation is the uncovering of “synergies,” which is arguably the scariest word for an employee at a company.
“Synergy” usually means the closing and combining of stores, warehouses, and offices, REDUNDANCIES, which also often comes with job cuts.
I wonder if the government will be bringing an anti-monopoly suite against them?
And here are the guys who are getting rich off this merger:
Michael Klein, who runs Klein & Company, a small boutique advisory firm, is advising Dow Chemical on the deal.
The deal is expected to generate around $200 million in fees, according to Jeffrey Nassof of M&A consulting firm Freeman & Co. Lazard and Morgan Stanley are also advising Dow, while Evercore and Goldman Sachs are advising DuPont.
So, maybe someone here can answer this question:
Who and what is left as competition for this behemoth after the merger?
Does this merger create a monopoly?
In a key sector, by the way. One that effects not only the food supply, but also our wider national security.
““Synergy†usually means the closing and combining of stores, warehouses, and offices, REDUNDANCIES, which also often comes with job cuts.”
You make it sound it is like a bad thing. Any sane business exists to make money and maximize shareholders’ wealth. Employees are expenses. They add to costs. The lower the cost, the better the margins. This is particularly true of low-level positions that become redundant or unnecessary due to automation and other ADVANCEMENTS. I hate the word “synergy” because it is vague and you can attach any meaning to it.
I wish companies would not try to be politically correct and just say like they mean it: employees are costs... our company exists to maximize profits, so cutting costs is one of the direct ways to accomplish our mission.
The word “redundancy” has been synonymous with “job cuts” in the British Isles for ages. To be “made redundant” means to be laid off.
That’s crony capitalism at work, not the free market. The more people out of work, the more on government assistance, and the fewer customers for a business’ products, leading to more consolidation. The endgame is nationalization, whether de jure or de facto.
One part of the Reuters article calls it a “duopoly” between the nascent Dow DuPont and Monsanto.
Dowpont?
Doubful, since consolidation makes it easier for the politicians to know who’s buying them off.
“That’s crony capitalism at work, not the free market. The more people out of work, the more on government assistance, and the fewer customers for a business’ products, leading to more consolidation. The endgame is nationalization, whether de jure or de facto.”
Nothing “crony” about free-market capitalism where companies want to keep costs low, which means taking care of each line item. Labor costs are typically the biggest cost factors. Just pure accounting, nothing crony capitalistic about this.
Having said that, providing freebies is socialism. Complain that gubmint is providing freebies. Don’t complain that companies are trying to make money and streamline.
Thanks.
So draconian corporate taxation, micromanaging regulation and the like are not the biggest factors in cost, which are not in control of the companies but of the government? That was what I was talking about.
Nothing “crony” about free-market capitalism where companies want to keep costs low, which means taking care of each line item. Labor costs are typically the biggest cost factors …
“So draconian corporate taxation, micromanaging regulation and the like are not the biggest factors in cost, which are not in control of the companies but of the government? That was what I was talking about.”
You are throwing red-herrings.
I said labor costs are one of the biggest costs. I did not say gubmint costs were not. Please comprehend.
And businesses should try to cut both down; decrease labor costs and decrease gubmint costs. The quickest and easiest thing to do is cut labor costs. Cutting gubment costs require external dependencies. And questioning business decisions will only empower the gubmint, so your questioning the business practices and a broad-brush labeling as “crony” capitalism will only ensure the gubmint sticks its nose to “save” the “workers”. Good going, comrade.
Well, please acknowledge at least that the greatest cause of increase of labor costs is government regulation, taxation et al, or government costs. The two are interrelated. Those businesses that go along with such governments are enablers of same, usually with the goal of crushing competition and moving towards oligopoly/duopoly/monopoly/even nationalization.
I guess anti-trust and monopolies are old fashioned ideas. These mega-mergers are horrible for this country.
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