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DowDuPont Closes Sale of Certain Corn Seed Assets for $1.1B

Zacks

DowDuPont Inc.’s DWDP subsidiary, The Dow Chemical Company has completed the earlier announced sale of a part of its Dow AgroSciences unit’s corn seed business in Brazil to CITIC Agri Fund for $1.1 billion. The divestment is part of the required regulatory remedies of the DowDuPont merger that closed on Aug 31, 2017.

The assets being divested include four corn seed production sites and four research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand and specific commercial and pipeline hybrids. Moreover, CITIC Agri Fund received a license to the Dow Sementes trademark for 12 months.

DowDuPont’s Agriculture Division will retain Dow AgroSciences’ Brazilian corn germplasm bank and the rest of its corn seed production sites and research centers, commercial and pipeline corn hybrids and other associated assets.

With the completion of the asset sale transaction, DowDuPont’s Agriculture Division will now move ahead with a comprehensive and balanced portfolio and a strong pipeline of novel solutions across seed, crop protection, seed-applied technologies and digital agriculture.

DowDuPont has underperformed the industry it belongs to over the past three months. The company’s shares have moved up around 9.2% over this period compared with roughly 11.4% gain recorded by the industry.


DowDuPont, during third-quarter 2017 earnings call, said that demand outlook remains positive for most of its key end-markets. It will remain focused on executing its near-term priorities that include delivering earnings and cash flow growth, executing its $3-billion cost synergy initiatives and advancing activities to create three growth companies in Agriculture, Materials Science and Specialty Products.

DowDuPont also declared it will take actions to enable cost savings of $3 billion. These include workforce reductions, buildings and facilities consolidations and select asset shutdowns. DowDuPont recorded pre-tax charges of $180 million in third-quarter 2017 in connection with the actions that are approved so far. It expects to record total pre-tax charges of around $2 billion, with around $1 billion expected in fourth-quarter 2017.

DowDuPont currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked companies in the basic materials space include Westlake Chemical Corporation WLK, Ingevity Corporation NGVT and Koppers Holdings Inc. KOP, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake has an expected long-term earnings growth of 10.6%. Its shares are up roughly 76% year to date.

Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 44% year to date.

Koppers has an expected long-term earnings growth of 18%. Its shares are up roughly 25% year to date.

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