Dow-DuPont merger to create Rs 11,600-crore chemical giant in India

Posted by BH Accounts on

The merger between Dow Chemical and Dupont will create a Rs 11,600-crore speciality chemicals giant in India that will take on the likes of BASF in chemicals and Syngenta and Monsanto in agro chemicals.

Dow Chemical in India had an annual revenue of Rs 6,500 crore in 2014 with 900 employees while DuPont had 4,000 employees with net sales of Rs 5,100 crore. Sales of both companies in 2015 are flat because of a weakening rupee, according to analysts.

Analysts said the proposed merger might not make much impact on the Rs 15,000 crore agrochemicals industry in India dominated by Monsanto, Clariant Chemicals and some local companies.

"The merger will instead create a giant in the specialised chemicals industry. The merged entity may focus on the agrochemicals business like pesticides, which is growing very fast," said an analyst with Edelweiss asking not to be named.

On Wednesday, the Wall Street Journal reported that Dow Chemical and DuPont, two of America's oldest companies, were in talks to merge. The Dow Chemical spokesperson in India declined to comment on the proposed merger likely to be announced this week.

On November 17, rival Monsanto had announced it was evaluating another takeover bid from Syngenta. Analysts said falling crop prices and the threat of competitors consolidating were exerting pressure on all multinational chemical companies.

Dow Chemical has been in the news for its takeover of Union Carbide's Indian business in February 2001. A gas leak at the Union Carbide plant in Bhopal caused 8,000 deaths in 1984.

Dow Chemical has never admitted to the liabilities of the industrial disaster and instead said Union Carbide operated as a wholly owned subsidiary with its own assets and liabilities. Dow Chemical said according to opinion from two legal luminaries, Abhishek Manu Singhvi and Arun Jaitley, it could not be found liable under Indian law. After the merger with DuPont, the liabilities of Union Carbide would be kept separate, said a lawyer.



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