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Dow-DuPont deal: 2 Wilm. HQs, new tax breaks, no new job guarantees (Updated)

Two successors to be run from Delaware

(See NEW section on tax breaks, fifth paragraph) When they are combined into a single company, DuPont Co.'s Johnston, Iowa-based crop seeds group and Dow Chemical Co.'s Indianapolis-based pesticides business will report to a bare-bones corporate headquarters in Wilmington, where the pair plan to base their new $30 billion-plus agricultural-sales company. The new ag company will keep the DuPont name.

Delaware elected officials, who have lost a series of corporate headquarters and plants to mergers and shutdowns, congratulated themselves on the decision. But it's not clear the move will add any jobs in their state.

DuPont and Dow are planning more cost cuts in advance of their planned merger later this year. DuPont already laid off 1,700 central office and R&D staff in Delaware earlier this winter, leaving around 4,500 jobs there (plus Dow's 600-worker electronics plant in Newark, Del. Dow employs another 2,000 at former Rohm and Haas sites around Philadelphia.)

The Delaware headquarters "will not change or add to the 2016 restructuring we implemented in December," DuPont officials noted in an SEC filing (updated). Staffing plans "will evolve over the next two years." DuPont's own Wilmington-based pesticide business, as part of the new ag company, could relocate the business from Wilmington to the Midwest "over the next two or more years," depending on a decision process that is still underway, according to the filing. DuPont last year shut a new seed lab in Newark and moved some ag staff to the Midwest.

NEW: Gov. Jack Markell said in a statement that Delaware would offer incentives to try to get the companies and any spin-off successors to base more managers and researchers in Delaware. His staff sent this list:
- "Up to $6 million in matching funds to reimburse DuPont for 3% of capital expenses (of) up to $200 million."
- "$3.6 milllion to support employment." (The Wilmington News Journal says this could support 400 new jobs, but neither DuPont nor Delaware spokespeople have confirmed any job targets, and DuPont says staffing decisions haven't been made.)
Those two grants are pending "approval by the Council of Development Finance."
- "Amend Delaware's existing research and development tax credit (by removing) the current aggregate statewide cap on the credit of $5 million," so it could go higher, and also "make it refundable" even when companies aren't profitable or owe less tax than they earn in tax breaks.
- "Modernize Delaware's New Economy Jobs Tax Credit" by rebating a percentage of what corporate workers "with an average salary of $70,000 plus" would otherwise owe in Delaware personal income taxes for employees of the new DuPont pesticide company and the Specialty Product Company, another planned DuPont successor.
Last year, Dow earned $4 billion and DuPont earned $2.4 billion in after-tax profits.

EARLIER: As headquarters, Wilmington will be home to the ag company's "CEO and corporate support functions" using "existing corporate infrastructure." Stock analyst Jonas Oxgaard of Sanford Bernstein & Co. told the Indianapolis Star that the ag company's headquarters will employ maybe 100 staff.

Other central jobs, including "business lines, business support functions, R&D, global supply chain, and sales and marketing" will remain "in the two Midwest locations," the company said, as part of what DuPont CEO Edward Breen calls "this efficient structure."

DuPont ag boss Jim Collins could end up running the new company, DuPont sources say, but the company says a decision is many months away.

In Iowa, local officials who had hoped to win the new company's headquarters had to be content with keeping DuPont Pioneer and its 2,600 jobs. Iowa state and local officials pledged $17.2 million to keep DuPont happy, according to the Des Moines Register. 

A second (and the largest) planned Dow-DuPont successor, including Dow's legacy Materials businesses, plus DuPont Performance Materials, with total sales of $50 billion, will be based at Dow headquarters in Midland, Mich., and keep the Dow name, Dow boss Andrew Liveris said in a statement.

DuPont's legacy "Specialty Products" company -- an as-yet unnamed group of DuPont's remaining businesses, except ag and performance-materials -- will be based in Wilmington. The group includes electronics, nutrition, health, industrial biosciences, and safety (Protective Solutions) products, and will also include Dow Electronics and its Newark, Del. plant.

Noting those businesses don't have a lot in common, some observers have suggested that group could be broken up or sold in pieces, as Breen did with his previous company, Tyco International Ltd.

Breen split Tyco into four publicly-traded companies while selling other major business units. Each of the Tyco successors except Berwyn-based TE Connectivity has since agreed to be acquired by larger companies or buyout investors.

Dow and DuPont hope to complete the merger by the end of 2016 and finish the spin-offs by 2018.