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MONOPOLY MALAISE

December 14, 2015 Joe Coleman Front page, News 0

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American chemical giants DuPont Co. and Dow Chemical announced on Friday they would merge as part of a $130 billion deal. The corporation will be re-branded as DowDuPont and will eventually split up into three different, publicly-traded companies. The focus of the new ventures will be on plastics and materials, agriculture, and specialty products. Apparently, this will allow Dow and DuPont to reconfigure assets based on the diverging fortunes of their businesses.

The merger deal will face intense regulatory scrutiny and lead to job cuts. DuPont naturally (or unnaturally) did not mention layoffs in their announcement, but said it would provide $650 million in “employee separation costs” that would affect approximately 10% of its workforce. Dow Chairman Andrew Liveris lauded, “Each company will be a leader in attractive segments where global challenges are driving demand for these businesses’ distinctive offerings.” I give Mr. Liveris a 9 out of 10 for his corporate-speak.

After the preferred shares are converted, Dow shareholders will own 52% of the company. Activist investor Nelson Peltz of Trian Partners said it’s “a great outcome for all shareholders.” An ‘activist investor’ isn’t a social activist but is an “individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change in the company” according to Investopedia. The companies are currently suffering from decreasing demand for farm chemicals yet their plastics businesses are thriving due to low natural gas prices.

Both corporations have an extensive history of damaging both our environment and our society. Throughout much of its history, DuPont was driven by a strong anti-union approach to treating its employees. DuPont successfully kept employees from organizing unions through a combination of intimidation and paternalism. DuPont did happen to coin a very catchy slogan, “better living through chemistry”, which is a slogan I am quite fond of and took to new heights of meaning as a young adult. Yet, DuPont’s chemistry ushered in serious environmental hazards like the depletion of the atmosphere’s ozone layer; carcinogenic chemicals linked to the production of non-stick coatings; and fungicides that killed plants as well as fungi.

As for Dow Chemical Co., we can thank them for napalm and Agent Orange during the Vietnam Era. It is this legacy that caused many critics to assert Dow had reached war criminal status. In 2001, Dow refused to assume any responsibility for the thousands of workers and citizens killed or disabled by a massive toxic leak at one of their plants in India.

One of the reasons for this complicated merger-before-breakup deal is so the company can avoid paying taxes. “They need to merge first in order for the subsequent spinoffs to qualify as tax-free transactions in the United States,” according to James Sheehan of SunTrust Robinson Humphrey. This is all perfectly legal in the eyes of current US law.

The COP21 climate summit in Paris recently exemplified to many just how little can be done when corporations continually try to water-down and compromise global accords attempting to turn the tide of global warming. In this year alone, we’ve seen the following mergers: Dell Inc. merged with EMC Corp.; Pfizer merged with Allergan; Anheuser-Busch merged with SABMiller.; AT&T merged with DirecTV; and finally, Comcast merged with Time Warner. And now this merger. Its become clear that corporatism is killing our planet and our society. This new mega-company will have more combined wealth than the GDPs of several European countries. If we, as a culture, decided to do away with these democracy-strangling leviathans, would we even be able to?

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