DuPont and FMC swap plants, trading weed and bug killers for drug additives

The DuPont Co. is selling its 470-employee Stine Discovery Research Facility west of Newark, Del., to Philadelphia-based FMC Corp. -- and buying FMC's 100-worker drug-additives plant across town.

It's part of a multibillion-dollar global swap of DuPont bug and weed killers for FMC food and drug additives. FMC is paying DuPont $1.2 billion in cash and $425 million in working capital as well as its additives business, which collected $700 million in sales last year.

The deal meets conditions imposed by the European Commission for merging DuPont into the larger Dow Chemical Co. The commission worried that Dow and DuPont would use the merger to cut research and development, reduce competition, and boost prices unless they sold some pesticides and labs to a "global" competitor.

Scientific staff at Stine, which includes around 500 acres of fields where workers test pesticides and other products, have seen FMC as a welcome buyer. Some feared Dow and DuPont might otherwise have consolidated R&D at their facilities in the Midwest, as I noted in this story Tuesday.

DuPont and Dow also said Friday that they are moving the target date for their merger back to August. They had hoped to be done by June 30.

DuPont will pick up FMC Health & Nutrition facilities worldwide, employing around 1,000 people, including 100 at the Newark plant on Route 273. The plant "primarily services health and nutrition pharmaceutical customers with excipient and disintegrant capabilities" that help patients digest drugs, FMC spokesman Dwayne Roark told me.

FMC also has a research site in Ewing, near Trenton, that employs around 160. "It is too early to say" how FMC will consolidate DuPont researchers and projects with its existing R&D, but "we can say that we do intend to grow our overall research capabilities globally," Roark said. FMC employs around 500 at its high-rise headquarters in University City, and has plants in major markets worldwide.

The sale to FMC includes DuPont bug killers and weed killers with yearly revenue of $1.4 billion, including Rynaxypyr, an insecticide used on fruits and vegetables; Cyazypyr, which combats citrus flies; and Indoxacarb, which the Environmental Protection Agency calls "a reduced-risk substitute" for toxic pesticides called organophosphates.

Most DuPont pesticides will remain with the company and become part of a future Dow-DuPont farm products spin-off company.

DuPont will also retain its 70-worker Haskell toxicology and product-safety testing center, next door to Stine, on what has been DuPont's 525-acre Stine-Haskell campus.

After DuPont reduced its former Central Research labs in Wilmington and laid off scientists in preparation for the Dow deal last winter, the European Commission said it feared the merger would give the companies "an incentive to discontinue" some "important herbicide, insecticide and fungicide" research, and "cut back on the amount they spend on developing innovative products."

DuPont CEO Edward Breen told investors in a conference call Friday morning that he and Dow boss Andrew Liveris "are highly confident" they will trim "far more" than the $3 billion they had previously planned by cutting people, facilities, and contractor expenses. He said 500 projects to improve operations are under review, not counting vendor consolidation.

Breen, a Bucks County resident, Comcast Corp. director, and former CEO of the former Tyco International and General Instrument Corp., said the Dow and DuPont cuts will eventually help their businesses take products to market faster and more profitably, boosting profits and share values.

Dow and DuPont plan to keep cutting costs before breaking into three independent corporations:

-- A "materials company," including most of Dow's old businesses, and based at its Midland, Mich., headquarters.

-- An "agricultural" company, selling crop seeds and pesticides to industrial farmers.

-- A "specialty" company, based on DuPont's remaining mix of food additives, safety equipment, electronics, and other businesses. Some investors expect these units may be sold to other companies.

DuPont has said the agricultural and specialty companies will, like DuPont, be based in Delaware. The state last year cut corporate taxes applicable to the companies as part of a deal to keep some of DuPont's remaining 4,500 jobs from going elsewhere.

DuPont grew from a water-powered gunpowder plant on Brandywine Creek into the most valuable U.S.-based industrial company after World War II, employing tens of thousands in the tri-state area. But the company has had trouble turning research into profits in recent years.