Dow-DuPont Beset by Delays as EU Demands Missing Deal Info

(Bloomberg) -- Dow Chemical Co. and DuPont Co. face further delays to their plan to create the world's biggest chemical company after the European Commission demanded more information about the $59 billion tie-up.

The European Union's merger regulator “stopped the clock” in its in-depth investigation on Oct. 13, the watchdog said in an e-mail on Friday. This happens “if the parties do not provide an important piece of information that the commission has requested.”

Dow-DuPont, the first of a trio of mega-deals reshaping the agrichemicals industry, is embroiled in an extended probe by the EU over concerns that the combination may reduce competition for crop protection, seeds and some petrochemicals. The EU is separately examining China National Chemical Corp.'s bid for Switzerland's Syngenta AG.

The EU move is a re-run of a previous suspension that already delayed the regulator's Dow-DuPont probe by nearly a month. The extra suspension led analysts at Sanford C. Bernstein & Co. to lower the probability of the deal closing from 85 percent to 75 percent.

“While we still believe the deal should close, it is becoming increasingly probable that the” commission “is slow-walking this deal,” Jonas Oxgaard, a New York-based analyst at Bernstein said in a note. It “likely delays the closure of the deal date to sometime in late March 2017.” 

Dow said in a statement Friday that it always expected a “thorough review” and both companies are working with the EU and other regulatory agencies. The deal is expected to close in the first quarter of 2017, the company said.

Dow fell as much as 0.6 percent and was down 0.3 percent at 1:44 p.m. in New York trading, while DuPont shares were little changed, erasing losses of as much as 0.5 percent.

Dow Chief Executive Officer Andrew Liveris said last month that the merger may be delayed until February from a planned closing late this year, as European antitrust officials take more time to consider potential competition issues in pesticides and crop seeds. Liveris said the value created by the deal made the wait worthwhile.

EU Competition Commissioner Margrethe Vestager has raised concerns that the agrichemicals industry is "quite concentrated already" and she'll ensure that farmers have affordable prices and a choice of providers. EU lawmakers and environmental campaigners have been calling on her to block Bayer AG's bid for Monsanto Co.

Regulators twice stopped the clock on their review of Halliburton Co.'s bid to buy oil-services rival Baker Hughes Inc. earlier this year, saying they needed more information from the companies. The firms abandoned the deal in May as the companies struggled to overcome antitrust concerns from the U.S., the EU and other regulators.

“Once the missing information is supplied by the parties, the clock is re-started and the deadline for the commission's decision is then adjusted accordingly,” the commission said.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net. To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Jack Kaskey