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Comment by giardini | Hacker News Reader

The two companies cultures are incompatible.

Dupont has an "employee-first" attitude that permeates the corporation and dates from its early years when the manufacture of gunpowder proved to be so risky. The Dupont family owners recompensed families of injured/dead employees by providing housing and supporting them for the remainder of their life. Safety became paramount in all operations. The attitude remains today. Despite the recent indiscretions in the LaPorte, Texas plant, Dupont is probably the safest chemical company on the planet.

If Dupont culture dominates, then this will likely prove a Renaissance for Dow. OTOH should Dupont culture be subjugated, it will ruin the value of the merger and we will all lose a company (Dupont) that has been possibly the best-run, most forward-looking corporation that has existed.

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According to Dealbook [0], "The new company would have dual headquarters in Wilmington, Del., and Midland, Mich."

Dual headquarters usually works out about as well as co-CEOs.

To the point of DuPont having a great company culture, I agree. I used to cover them as an investment banker....they are definitely safety-obsessed.

[0]: http://www.nytimes.com/2015/12/12/business/dealbook/dow-chem...

What do you do now that you are no longer in banking?

entrepreneur

I recommend also keeping track of who's in charge to determine what the new company will end up being.

Detailed example:

https://en.wikipedia.org/wiki/Time_Warner#AOL_Time_Warner_me...

Is it unusual to stage a merger like this with the explicit goal of splitting into three smaller companies in the near-ish future? If the company is planning on splitting, I would imagine the consequence of having two headquarters would be different.

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.

I'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.

Delaware? Any reason for that specifically?

Delaware is very tax-friendly. A vast number of companies incorporate in Delaware due to this reason.

edit: words

It'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.

My 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.

All true, but additionally in this case, the actual physical headquarters of DuPont is in Wilmington, Delaware.

DuPont is there, Dow is in Michigan. My hunch is that DuPont is in the driver's seat on this one.

TDCC is also incorporated in Delaware.

Dow 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.

DuPont 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!

You 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.

Huh? 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.

IIRC, 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.

AOL bought Time-Warner. It was only later that the inept AOL management was pushed out by the TW old guard.

Disagree...I would say the only thing the new name "means" is that "DowDuPont" sounded better than "DuPontDow".

There were only couple of options for this merger to take place.

1. Dow and DuPont merge without any further plans to split. This wouldn't fly with regulators as combined entity will have too much power in US as well as worldwide. Not only US regulators but also regulators in EU and Asia will be very interested in vetting such deal.

2. Dow and DuPont swap the agriculture and specialty products divisions and merge the materials division with recent DuPont spin-off Chemours. This wouldn't fly with regulators either as both Dow and DuPont will have too much power in their respective segments.

If Dow and DuPont would have gone with option 1, the regulators would have come up with their own plan to divest certain businesses to approve merger. Instead, Dow and DuPont are offering a future split solution by proposing to split in three portions that will get them closer to option 2 with some regulator-driven divestment.

I will not be surprised when and if merger and split goes through, we land up with the second scenario anyway. Agriculture goes to Dow with HQ in Midland MI, Specialty products goes to DuPont with HQ in Wilmington DE, and Materials goes to Chemours.

No, DuPont does not have an employee first attitude:

https://theintercept.com/2015/08/11/dupont-chemistry-decepti...

https://theintercept.com/2015/10/08/dupont-found-liable-in-c...

https://theintercept.com/2015/08/20/teflon-toxin-dupont-slip...

https://theintercept.com/2015/09/19/teflon-toxin-goes-to-cou...

https://theintercept.com/2015/08/17/teflon-toxin-case-agains...

http://www.cnn.com/2015/09/15/opinions/lerner-chemical-c8-du...

As someone who lived in the area during the height of their contempt for people and the environment: FUCK DUPONT

As a former regulator of that sector, they were nearly as bad as BP, which was well known for a laundry list of violations long before Deepwater Horizon.

DuPont "employee-first" culture hasn't been true since 90s. The business challenges at DuPont and the executive succession in 90s killed that image. DuPont used to be dream company to work for most new ChE graduates. I worked at Dow in mid-90s. I still have friends at both Dow and DuPont in addition to being stockholders of both companies.

I doubt the merger will be approved by US, EU and possibly Chinese regulators without major concessions. The subsequent 3-way split in 18-24 months is just trying to appease the regulators to approve merger. If merger goes through, there will be no major player at least in specialty chemicals in US and most probably 3-4 major players in this segment worldwide. Other proposed segments have similar issues.

DuPont is "employee first"? https://theintercept.com/2015/08/11/dupont-chemistry-decepti... may be of interest...

For those who aren't clicking without some context: DuPont has known since the 60s that C8, or PFOA[0], a chemical used in the production of Teflon, is harmful to humans even in tiny amounts. It has knowingly concealed and lied about the harm both to its employees and everybody else, and it has continuously released it into the environment while doing all that it can to avoid taking responsibility for the harms it has caused.

The linked article is the first in a series of three that take an in-depth look at the situation, the harms, and the lack of consequences for the company until now. I expect there to be more follow-up articles as there are some lawsuits now in progress with lawyers who are armed with internal documents showing that DuPont knew about the problems for decades.

[0] https://en.wikipedia.org/wiki/Perfluorooctanoic_acid

From the point of view of the owners, some of those old style, "employee-first", companies can't change their ways fast enough in order to improve profits.

I have seen first hand how one company used a merge as a excuse to change their culture. Some people, even speculated that this was the real reason for the merge.

If you are a majority stock holder, maybe a heir, you don't see the need in this times of weak unions, pro-business laws and cheap educated available labour of keeping your employees so happy.

I don't know anything about Dupont and Dow cultures, but if it is as you explain, you can bet what culture is going to dominate.

In Wilmington, Delaware here. I agree with this assessment. My Dad is a retired R&D scientist in materials for DuPont. Safety has always been treated with the utmost seriousness by the company. It was common for them to fire employees as early as the 1960s for failing to follow lab safety procedures. They are also famous for taking care of their employees.

They're breaking into 3 companies after merging, so the cultures shouldn't need to be too mixed, in too many places, for too long. (Or so one hopes.)

http://www.wsj.com/articles/dupont-dow-chemical-agree-to-mer...

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