January 7, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Preceding a merger between Wilmington, Del.-based DuPont and Midland, Mich.-based The Dow Chemical Company , layoffs are starting in already.
In December, the two companies announced the merger, with the combined new company to be called DowDuPont. Sometime after the merger, they intend to then split the merged company into three independent, publicly traded companies. The three companies are expected to be a global pure-play agriculture company, a pure-play material science company, and a technology and innovation-driven specialty products company.
“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” Andrew Liveris, Dow’s chairman and chief executive officer, said in a December statement. “This transaction is a major accelerator in Dow’s ongoing transformation, and through this we are creating significant value and three powerful new companies.”
But with major restructuring typically comes significant job losses, and those are starting already. DuPont indicated yesterday that it had laid off 200 scientists in its Central Research and Development division at the Experimental Station. That’s about half of the staff at that location.
This is the first series of what is expected to be the elimination of 1,700 jobs in Delaware over the next couple months. At the beginning of this year, DuPont employed 6,100 people in the state of Delaware.
The job cuts are currently hitting a lot of PhD-level scientists and technicians. “I can’t help but say I was a bit surprised,” said Ron Ozer, an engineer who lost his job on Monday, told The News Journal. “I guess I thought I was safer than I was.”
Overall, the cuts are expected to affect all of the DuPont business lines at 10 facilities in Delaware, all in New Castle County. Globally, DuPont is planning to lay off 10 percent of its workforce, or about 5,000 people. This is expected to save $700 million ahead of the proposed Dow merger.
Of the three spinoff companies, the specialty products company is expected to be headquartered in Delaware.
In November, Ed Breen replaced Ellen Kullman as DuPont’s chief executive officer. Since Breen took over, 80 to 100 people have been laid off in the company’s Sustainable Solutions business. Also, an unknown number of corporate attorneys have been let go, as well as the termination of 300 contract workers involved with DuPont’s “One DuPont” IT project, which has been halted.
The mood in Delaware is grim, with employees noting that the current round of job layoffs are taking place before the merger. They expect more job cuts once the merger is completed by the end of 2016.
“I had mixed feelings going into work today,” Ozer told The News Journal. “I feel like leaving now with the severance package is a better option because a year from now there will be additional cuts when we merge with Dow and the severance package won’t be as good.”
There appears to be at least some indications that some of the workers will be offered jobs in other parts of the country as different parts of the company are restructured or absorbed into other parts. A central marketing group has been eliminated, the IT project has been canceled and there have been cuts in the Delaware-based agricultural research and support divisions.
The combined companies would have a combined market cap of about $130 billion. Down shareholders will get a fixed exchange ratio of 1.00 shares of DowDuPont for each Down share. DuPont shareholders will get a fixed exchange ratio of 1.282 shares in DowDuPont for each DuPont share.
