The Dow Chemical — Merger or Acquisition (March 2016)
27 slides from The Dow Chemical's merger presentation, Mar 1, 2016
Slide 1: Merger Update & Form S-4 Highlights
MERGER UPDATE & FORM S-4 HIGHLIGHTS March 1, 2016
Slide 2: Regulation G and Forward-Looking Statements
Regulation G The attached charts include information that does not conform to generally accepted accounting principles (GAAP). Management of the companies believe that an analysis of this data is meaningful to investors because it provides insight with respect to comparisons of the ongoing operating
Slide 3: Important Information About the Transaction and Where to Find It
Important Information About the Transaction and Where to Find It In connection with the proposed transaction, on March 1, 2016 DowDuPont Inc. (f/k/a Diamond-Orion HoldCo, Inc.) (“DowDuPont”), filed with the Securities and Exchange Commission (“SEC”) a preliminary registration statement on Form S-4 t
Slide 4: Agenda
Agenda • Form S-4 Financial Highlights • Form S-4 DowDuPont Governance Highlights • Timeline & Key Workstreams Update • DowDuPont Synergies • DowDuPont: Unlocking Shareholder Value & Creating Three Leading Businesses Underpinned by Strong Industrial Logic 4
Slide 5: Form S-4 Overview
Form S-4 Overview • Initial filing of Form S-4 Registration Statement with the Securities and Exchange Commission (SEC) • Initial filing starts the comment and review period with the SEC • Form S-4 will become effective after the SEC has completed their review 5
Slide 6: Form S-4 Financial Highlights
Form S-4 Financial Highlights • Combined 2015 pro forma Net Sales of ~$74B and Operating EBITDA of ~$15B • Pro forma unaudited financial information was prepared on an as-reported basis1 • Key pro forma adjustments Dow is treated as the “acquiring entity” for accounting purposes per U.S. GAAP Si
Slide 7: DowDuPont Financial Profile
DowDuPont Financial Profile Pro Forma DowDuPont1 Net Sales ~$49B ~$25B ~$74B Operating ~$10B ~$5B ~$15B EBITDA Operating EBITDA ~20% ~20% ~20% margin % 45% of 25-45% of Cash Consistent with Current Dividend Policy Net Income from Operations Policies at Both Companies Targeting an Investment Credit R
Slide 8: Agenda
Agenda • Form S-4 Financial Highlights • Form S-4 DowDuPont Governance Highlights • Timeline & Key Workstreams Update • DowDuPont Synergies • DowDuPont: Unlocking Shareholder Value & Creating Three Leading Businesses Underpinned by Strong Industrial Logic 8
Slide 9: Governance Highlights
Governance Highlights Merged Entity • Andrew N. Liveris to be named Executive Chairman with focus on Material Science • Edward D. Breen to be named CEO with focus on Agriculture and Specialty Products • Breen and CFO are collectively responsible for DowDuPont’s financial oversight • Combined Board o
Slide 10: Advisory Committees: Structure & Responsibilities
Advisory Committees: Structure & Responsibilities Structure Responsibilities • DowDuPont board will establish Advisory • Advisory Committee responsibilities: Committees for the Agriculture, Material Sole authority to approve any changes to the Science and Specialty Products businesses scope of its
Slide 11: Agenda
Agenda • Form S-4 Financial Highlights • Form S-4 DowDuPont Governance Highlights • Timeline & Key Workstreams Update • DowDuPont Synergies • DowDuPont: Unlocking Shareholder Value & Creating Three Leading Businesses Underpinned by Strong Industrial Logic 11
Slide 12: Significant Progress on Execution of Planned Merger of Equals
Significant Progress on Execution of Planned Merger of Equals 4Q15 2016 2017-2018 Signed Hart- S-4 ROW Share- Close Stand Up SpinCos1 Complete Spins1 12/11/15 Scott- Filing Competi- holder 2H16 Rodino 1Q16 tion Vote Filing Filings 2Q16 1/27/16 Initial 1Q16/ Draft 2Q16 3/1/16 In-Process CLOSE Drive c
Slide 13: Joint Implementation Planning
Joint Implementation Planning Joint Executive Steering Team Dow Representation DuPont Representation Andrew Liveris – CEO Ed Breen – CEO Jim Fitterling – COO Nick Fanandakis – CFO Howard Ungerleider – CFO Stacy Fox – General Counsel Charles J. Kalil – General Counsel David Bills – SVP Corp. Strategy
Slide 14: Agenda
Agenda • Form S-4 Financial Highlights • Form S-4 DowDuPont Governance Highlights • Timeline & Key Workstreams Update • DowDuPont Synergies • DowDuPont: Unlocking Shareholder Value & Creating Three Leading Businesses Underpinned by Strong Industrial Logic 14
Slide 15: Total Expected Cost Synergies of ~$3 Billion
Total Expected Cost Synergies of ~$3 Billion Total DowDuPont Synergies Cost Synergies by Business Total Cost Synergies ~$3B ~$3B ~$0.3B Total Growth Synergies ~$1B Specialty Products ~$1.5B Material Science Total Synergies ~$4B Agriculture ~$1.3B Costs to Achieve1 $3.5B - $4.1B Cost Synergies by Fun
Slide 16: Agriculture Company Overview
Agriculture Company Overview Agriculture Headquarters: Wilmington, Delaware Net Sales: ~$16B1 Credit Profile: Generally consistent with DuPont profile as of Dec. 11, 2015 Cost Synergies: • Capitalize on DuPont’s industry leading seed production processes to enhance field efficiencies and lower unit
Slide 17: Specialty Products Company Overview
Specialty Products Company Overview Specialty Products Headquarters: Wilmington, Delaware Net Sales: ~$12B1 Credit Profile: Investment Grade Cost Synergies: • Integrate Dow Electronic Materials and DuPont Electronics & Communications laboratory facilities and technology presence ~$10B ~$2B Electroni
Slide 18: Material Science Company Overview
Material Science Company Overview Material Science Headquarters: Midland, Michigan Net Sales: ~$46B1 Credit Profile: Generally consistent with Dow profile as of Dec. 11, 2015 Cost Synergies: • Optimize selling and administrative costs and eliminate redundancies in cost structure ~$40B ~$5B • Realize
Slide 19: Estimated Corporate & Leveraged Services Synergies
Estimated Corporate & Leveraged Services Synergies • Streamline costs by achieving top quartile Cost Synergies by Function cost position for common corporate ~$3B functions and driving ~40% ~30% ~20% ~10% substantial scale benefit by leveraging COGS SG&A Leveraged Services R&D across businesses • De
Slide 20: Agenda
Agenda • Form S-4 Financial Highlights • Form S-4 DowDuPont Governance Highlights • Timeline & Key Workstreams Update • DowDuPont Synergies • DowDuPont: Unlocking Shareholder Value & Creating Three Leading Businesses Underpinned by Strong Industrial Logic 20
Slide 21: A Combination Unlocking Exceptional Value Across Three Leading Businesses
A Combination Unlocking Exceptional Value Across Three Leading Businesses DowDuPont Agriculture Material Science Specialty Products Revenue: ~$16B1 Revenue: ~$46B1 Revenue: ~$12B1 • Highly-synergistic merger of equals projected2 to unlock ~$30 billion of market value • Intent to pursue tax-free3 sep
Slide 22: Ag Co: World-Leading, Comprehensive Agriculture Business
Ag Co: World-Leading, Comprehensive Agriculture Business Most Comprehensive and Diverse Seed and Crop Protection Portfolio Combines Portfolios of Leading Products • World’s leading production agriculture With Strong Capabilities Driving Future growth business with most comprehensive, balanced Seed B
Slide 23: Specialty Products Co: Focused on Attractive Secular Growth End-Markets
Specialty Products Co: Focused on Attractive Secular Growth End-Markets Where Innovative Science Capabilities Provide Clear Competitive Advantage • Unique businesses that share similar investment characteristics and focus on specialty products • Core strengths in product innovation and application d
Slide 24: Materials Co: Low-Cost Integration & Value-Added Innovation
Materials Co: Low-Cost Integration & Value-Added Innovation Underpinned by Operational and Commercial Excellence ADVANTAGED WORLD-CLASS SCIENCE AND NARROWER, DEEPER END BACK-INTEGRATION ENGINEERING CAPABILITIES MARKET PRESENCE High-Throughput Research Packaging Ethylene Catalyst Discovery & Ligand S
Slide 25: Appendix
APPENDIX <> CH 25
Slide 26: DuPont Non-GAAP Reconciliations
DuPont Non-GAAP Reconciliations RECONCILIATIONS OF OPERATING EBITDA TO CONSOLIDATED INCOME STATEMENTS (dollars in millions) 2015 Income from continuing operations before income taxes $ 2,591 Add: Significant items (benefit) charge before income taxes (1) 453 Add: Non-operating pension/OPEB costs 397
Slide 27: Dow Non-GAAP Reconciliations
Dow Non-GAAP Reconciliations RECONCILIATIONS OF OPERATING EBITDA (dollars in millions) EBITDA Reconciliation 2015 Net Income Attributable to The Dow Chemical Company $ 7,685 + Net Income Attributable to Noncontrolling Interests 98 + Provision for Income Taxes 2,147 Income Before Income Taxes $ 9,930
The Dow Chemical Company — Merger or Acquisition (March 2016) on 6ix