Reuters — Chemicals and seeds producer DuPont indicated on Tuesday that its $130 billion merger with Dow Chemical will take longer to wrap up than previously expected as the companies await regulatory approvals.
This is the second time that the two companies, which are in talks with the European Union’s antitrust regulators, have had to push back the expected completion.
The EU regulators earlier this week gave the companies 10 more working days in connection with the ongoing review and set a March 14 deadline.
The regulators were mainly concerned about the companies’ crop protection businesses and DuPont “has been focused on a remedy package,” a company executive said on a post-earnings call. He did not provide further details.
The merger will create the world’s largest crop protection and seeds company, triggering regulatory concerns that it may reduce competition in these areas.
The deal, announced in December 2015, is now expected to close in the first half of the year. The companies had previously hoped to close the transaction in the first quarter.
DuPont, which also reported a better-than-expected profit for the sixth straight quarter, said it continued to have constructive discussions with regulators in key jurisdictions.
DuPont’s shares were up 2.4 per cent at $74.54 in early trading, while Dow’s stock rose two per cent to $58.29 (all figures US$).
DuPont said on Tuesday it expected an 18 per cent drop in first-quarter profit due to a charge of 15 cents per share related to the Dow deal.
Operating profit, which excludes one-time charges, is expected to rise about eight per cent, helped by cost cutting and the timing of seed deliveries.
Based on the company’s operating profit of $1.26 per share in the first quarter of 2016, that works out to $1.36.
Analysts on average are expecting $1.45 per share, according to Thomson Reuters I/B/E/S.
DuPont has moved from selling its farm products to retailers and distributors, focusing instead on selling directly to farmers, in the southern U.S.
This “route-to-market change” has pushed out the timing of some seed sales to the first quarter from the fourth, the company said.
DuPont said it expects first-quarter sales to be “about even” with the $7.41 billion it reported a year earlier.
Analysts are expecting $7.74 billion for the current quarter.
A fall in planted corn acreage in the U.S. this year, after a record yield in 2016, is expected to weigh on DuPont’s results.
Revenue from its agriculture business, which accounts for more than a quarter of total revenue, fell 10 per cent in the fourth quarter ended Dec.31.
Excluding items, the company earned 51 cents per share in the quarter, topping analysts’ estimate of 42 cents.
Net sales fell 1.7 per cent to $5.21 billion, missing analysts’ estimate of $5.29 billion.
— Reporting for Reuters by Arathy S Nair and Swetha Gopinath in Bangalore.