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The merger and the split are individually quite common, but relatively unusual as a combined transaction. I haven't seen any announced plans to have one HQ foc
by leroy_masochist 11y ago
The merger and the split are individually quite common, but relatively unusual as a combined transaction.
I haven't seen any announced plans to have one HQ focus on one of the three businesses and the other on another, but that would make at least a bit more sense. But then, what about the third business?
If I had to guess I'd say the decision to keep both the headquarters is psychology-driven. You don't want either the Dow folks or the DuPont folks thinking that they're the target, because usually in M&A situations the acquiror keeps A LOT more of its corporate overhead. So logically, this perhaps makes the most sense as an attempt to avert the desertion of a lot of talented lawyers, accountants, HR people, and other headquarters types.
If that is in fact the case, expect an announcement about six months after the deal closes that they're consolidating their headquarters. My guess is they'd keep it in Delaware.
- steve-howard 11y agoI'm not much of a business guy, I just find this kind of stuff interesting. Thanks for the reply, I know M&As are delicate but I don't know a whole lot of the strategy behind how they're carried out.
- geogra4 11y agoDelaware? Any reason for that specifically?
- _spoonman 11y agoDelaware is very tax-friendly. A vast number of companies incorporate in Delaware due to this reason. edit: words
- jegutman 11y agoIt's not really taxes, although the fees for filing corporate documents. The franchise taxes are lower, but the numbers for large companies are so tiny it's inconsequential ($800 in California compared to $150 in Delaware). My understanding is that Delaware has strong corporate law with well defined protections for corporations and lots of case law to back it up from their Chancery Court. The huge history of case law is really what makes the big deal from what I've read because it makes contracts enforced there (which all shareholder contracts would be) much more predictable in terms of what's allowed.
- omginternets 11y agoMy startup is based in Delaware: you're spot on. Low taxes, few constraints for internal organization, and clear answers from lawyers stemming from a rich jurisprudential history.
- leroy_masochist 11y agoAll true, but additionally in this case, the actual physical headquarters of DuPont is in Wilmington, Delaware.
- leroy_masochist 11y agoDuPont is there, Dow is in Michigan. My hunch is that DuPont is in the driver's seat on this one.
- sk5t 11y agoTDCC is also incorporated in Delaware.
- rmason 11y agoDow is headquartered in Midland, Michigan. Think of it as a one company town. The worry in state is that this is going to destroy the town. Kind of like when Chrysler moved out of Highland Park (near Detroit) and they lost 80%+ of their tax revenue and never recovered.
- VonGuard 11y agoDuPont IS Delaware. The reason the state is so business amenable is because DuPont effectively floats the whole state, tax-wise. Everything in Delaware is named after DuPont, and massive chemical plants dot the landscape. The DuPonts founded gardens, estates, schools, performance halls, everything. They're the first family of Delaware. And Delaware was the first state!
- AstroJetson 11y agoYou should look at the name of the company "DowDuPont". That means Dow is in the driver seat, they will pick. What it really means is Delaware and Michigan will now be in a bidding war for tax adjustments to keep the headquarters. But my money is on Michigan.
- elbigbad 11y agoHuh? Because of the order of the names? Maybe they did it in alphabetical order. Or because it sounds better. When AOL and Time Warner merged, it was called AOL Time Warner, but Time Warner was clearly the driver as history shows, for example.
- akg_67 11y agoIIRC, all headlines at the time of AOL-TW merger were new media (AOL) taking over old media (TW). What happened after the merger was primarily driven by dot-com crash and internal politics at AOL-TW. Typically, in a combined name scenario at merger, the acquirer/bigger influencer's name is listed first. AOL Time Warner, Exxon Mobil, Chevron Texaco are some few joint names after mergers that come to my mind. If you look at Dow and DuPont actions in last decade or so, you will notice that DuPont investors have been pushing for divestures, for example Chemours, and not acquisitions while Dow has been on acquisition binge, for example, Union Carbide, Lyondell.
- kevin_thibedeau 11y agoAOL bought Time-Warner. It was only later that the inept AOL management was pushed out by the TW old guard.
- leroy_masochist 11y agoDisagree...I would say the only thing the new name "means" is that "DowDuPont" sounded better than "DuPontDow".