DowDuPont Goes Dow The Rabbit Hole- Dow Spinoff Is Complete, Corteva Set For June

Some combinations are long-lived. Procter & Gamble(PG) became partners in 1837. Others are over before they began. Dow and DuPont merged 18 months ago to form DowDuPont(DWDP). From the time the deal was announced 18 months earlier, they planned to break up. Now, after shuffling around some businesses, they have taken the first step in their breakup process. After the close of trading yesterday, April 1, 2019, Dow, Inc.(DOW) became an independent business.

Comprised of the Materials Science business of both companies, Dow is born with size, replacing its parent in the Dow Jones Industrial Average. As mentioned before, DowDuPont shareholders received one share of Dow stock yesterday for every three shares of DowDuPont stock held. Shareholders will receive cash in lieu of fractional shares. The transaction is expected to be tax free to shareholders. DowDuPont will keep the Dow in its name until the June 1 spinoff of Corteva, the combined agriculture business.

As is the usual practice, both parent and child issued press releases noting the completion of the spinoff. DowDuPont’s was brief, noting the details of the transaction and mentioning the upcoming Corteva spin, together with a short quote from CEO Ed Breen.

“Today’s announcement completes our first step toward creating three strong, independent growth companies set to be industry leaders focused on driving innovation and delivering long-term value for shareholders,” said Ed Breen, chief executive officer of DowDuPont. “Dow begins its next chapter as a more focused, disciplined and market-oriented company, and I am excited for the tremendous opportunities ahead for its employees, shareholders, and customers.”

Dow’s statement was chattier. It also recapped the details of the transaction and mentioned that it would be trading “under its historical symbol DOW”.  It also is filled with marketing fluff.

Dow launches with global scale and leading positions in three attractive consumer-driven segments: packaging, infrastructure and consumer care. Dow is now even better positioned to drive revenue growth and innovate for its customers, leveraging three advantaged building blocks – ethylene, propylene and silicones – to power one of the deepest chemistry sets in the industry.

Three advantaged building blocks! Deepest chemistry sets! Ooh! Ah! The management team is excited to get going.

“Today marks the beginning of a new and exciting chapter for Dow,” said Jim Fitterling, chief executive officer. “The changes we have made to Dow’s portfolio, cost structure and mindset are significant. The new Dow is a more focused and streamlined company with a clear playbook to deliver long-term earnings growth and value creation for all stakeholders. Team Dow is well positioned to achieve our ambition of becoming the most innovative, customer-centric, inclusive and sustainable materials science company. We have all the tools in place to innovate more quickly, to operate more productively, and to invest more prudently to deliver value creating growth, higher returns and enhanced shareholder value.”

“Today we celebrate this milestone with our customers, communities, investors, and Team Dow,” said Howard Ungerleider, president and chief financial officer. “With our focused portfolio, streamlined cost structure, disciplined approach to capital allocation, and shareholder friendly capital return framework, the new Dow has the right capabilities and team to drive best-in-class operating and financial performance.”

And, how could we forget the new brandline. What’s a brandline? We’re not sure… a fancy way of saying slogan or motto maybe?

The new Company will be referred to by the brand name “Dow,” acknowledging the remarkable legacy while also reflecting the company-wide evolution to a materials science solutions provider. Dow is adopting a new brandline – “Seek Together” – which is a call to action that highlights the value of collaboration to deliver innovation and solutions to our customers and value chains. It represents the way Dow seeks to collaborate with all of its stakeholders as it delivers on its ambition. The iconic Dow Diamond, which has stood as the Company’s logo for more than 120 years, is unchanged and will continue to be a core element of the Dow brand.

Maybe we should adopt a brandline here at Stock Spinoffs- “Spin Together” – a call to action that highlights the value of curation to deliver information to all of our readers and value chains. Or maybe a call to action to attend a fitness class. You never can tell with bees.

Disclosure: The author holds no position in any stock mentioned