LONDON (ShareCast) - (ShareCast News) - The European Commission has cleared the proposed merger between US chemical companies Dow Chemical and DuPont.
The approval is conditional on the divestiture of parts of DuPont's global pesticide business, including its global R&D organisation.

Meanwhile, Dow will sell its two manufacturing facilities for acid co-polymers in Spain and in the US, as well as the contract with a third party through which it sources ionomers that it sells to its customers.

Competition Commissioner Margrethe Vestager said: "Pesticides are products that matter - to farmers, consumers and the environment. We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment.

"Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future."

The EC had been concerned that the merger as notified would have reduced competition on price and choice in a number of markets for existing pesticides and reduced innovation.

Dow said in a statement: "This regulatory milestone is a significant step toward closing the merger transaction, with the intention to subsequently spin into three independent publicly traded companies."

It added that the deal is expected to create significant cost synergies of around $3bn with the potential for $1bn in growth synergies.

DuPont said it will divest its Cereal Broadleaf Herbicides and Chewing Insecticides portfolios. It will also sell its Crop Protection research and development pipeline and organisation, excluding seed treatment, nematicides, and late-stage R&D programs, which DuPont will continue to develop and bring to market.

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