Update: 'EU saved our jobs': DuPont to sell Delaware ag R&D center, bug and weed killers to divest

DuPont officials told hundreds of R&D and support staff that most of them would be transferred to a new, as-yet unnamed rival company, as part of a deal with European anti-monopoly regulators to win approval for DuPont to merge with Dow Chemical Co.

UPDATE: "We are grateful for the European Union. They saved our jobs," a veteran researcher at DuPont's 515-acre Stine-Haskell pesticide labs and field-testing complex in Newark, Del., told me this morning, after bosses told hundreds of R&D and support staff that most of the business will be sold to an unnamed company, as part of a deal with European anti-monopoly regulators to win approval for DuPont to merge with Dow Chemical Co.

Speaking on condition I not identify the researcher, the person added that DuPont veterans are hoping the Stine complex and their projects are sold to another U.S.-based operator, such as Philadelphia-based FMC Corp., North Carolina-based Arysta Life Sciences, or another outfit that's looking to grow.

Without a sale, they feared they would have been laid off, as DuPont boss Edward Breen and Dow chief Andrew Liveris hunt for $3 billion in cost cuts. They worried they could have ended up like the nearby DuPont Experimental Station's former Central R&D unit, where, last winter, scientists and technicians were let go, retired early or transferred out to business groups 

Instead, DuPont Co. will spin off most of its 600-person Stine-Haskell research center in Newark, Del., a list of its bug-killer and weed-killer pesticides, and other facilities in India and elsewhere, to an as-yet unnamed buyer, to please European Commission anti-monopoly regulators so they will approve the company's planned merger into the larger Dow Chemical Co., company bosses told workers in DuPont's agricultural units this morning.

The buyer should be announced by late April. DuPont is divesting insecticides Rynaxyphyr (which kills moths and caterpillars that eat fruits and vegetables; licensed to Arysta), Cyazypyr (kills citrus flies) and Indoxacarb (which EPA calls a reduced-risk substitute for organophosphates, for use in protecting fruits and vegetables), and a list of -sulfuron herbicides often used to kill weeds in grainfields (complete list below). DuPont will keep other pesticide businesses, including staff and facilities at the Haskell complex on the Stine-Haskell site. Not everyone yet knows which company they will stay with.

EARLIER: DuPont shares rose 1% in morning trading - the biggest rise of the Dow 30 stocks today -- after the Wilmington, Del. chemical maker said it agreed to conditions set by Europe regulators for its planned merger into Dow Chemcial Co. Below are excerpts from DuPont CEO Ed Breen's "DuPont Colleagues" note to staff this morning, and from a second note by DuPont ag boss Jim Collins and pesticide chief Tim Glenn. See also DuPont's public statement on its divestments:

"I am pleased to share that the European Community today conditionally approved our merger of equals with Dow, marking another significant milestone toward closing the transaction," Breen wrote in today's email.

"The EC conducted a thorough review... and in approving the transaction has required us to divest a portion of our Crop Protection [pesticides] portfolio and R&D assets. [Europe also required Dow to sell its acid copolymers and ionomers business.]

"In Crop Protection, DuPont will divest its Cereal Broadleaf Herbicides and Chewing Insecticides portfolio," along with its pesticides "research and development pipeline and organization" -- with the important exceptions of "seed treatment, nematicides, and late-stage R&D programs, which DuPont will continue to develop and bring to market."

UPDATE from Collins and Glenn: According to a separate note to "DuPont Crop Protection Colleagues," the divested bug-killers list "includes the Insecticides Rynaxypyr, Cyazypyr and Indoxacarb, and the Herbicides metsulfuron, chlorsulfuron, tribuneron, thifensulfuron, fuupysulfuron, trisflusulfuron, ethametsulfuron, azimsulfuron, and lenacil."

The spinoff business will be run, at least for now, by Jean Pougnier, DuPont's Crop Protection Business Development Director." 

Businesses DuPont will keep, and combine with Dow businesses in a new spinoff pesticide and seeds business that is supposed to be headquartered in Delaware, include "an excellent portfolio in corn and soy broadleaf [weed] and grass control, a robust cereal weed control portfolio, DuPont's storng position in disease control," to be joined with "Dow AgroSciences' industry leading insecticide portfolio." 

BACK TO BREEN: European approval brings Dow and DuPont "one significant step closer to finalizing the merger" and splitting the combined businesses into three companies, including "a much stronger, world-class Ag competitor," with "broad, deep offerings and a greatly expanded pipeline across seed germplasm, biotech traits, and crop protection," even without the businesses to be divested, Breen added.

"We will retain over half of DuPont's Crop Protection business, bringing together with Dow a strong portfolio of crop protection chemistry," including "an excellent portfolio in corn and soy broadleaf and grass control, a robust cereal weed control portfolio, DuPont's strong position in disease control, and Dow AgroSciences' industry leading insecticide portfolio." 

The split doesn't hurt the business and financial opportunities from the Dow deal and $3 billion in additional planned expense cuts, Breen added: "This outcome maintains the strategic logic and value creation potential of our merger with Dow."

DuPont is "in negotiations to divest" the businesses Europe insisted the companies separate, selling them "to a buyer that has a complementary businesss and places the same level of importance on continuous innovation." Europe insisted "that a buyer would have the capability to be a strong innovator and competitor in crop protection."

What happens to the people at DuPont's suburban Wilmington headquarters, its sprawling Stine-Haskell lab and growing complex in nearby Wilmington, and other sites worldwide?

"We are confident that colleagues who are part of the divested operation will have many opportunities going forward..." Breen noted. 

DuPont ag boss Jim Collins and his lieutenant Tim Glenn are meeting with DuPonters today to talk about whether their groups will stay or go.

Even before the sale, Europe is requiring DuPont to set up "a 'Divestment Business'" that will begin to "operate separately from DuPont." 

What's next? "We continue to engage constructively with regulators" in other countries, Breen added, "to obtain clearance for the merger, which we are confident will be achieved." No timetable provided.

Breen concluded by praising DuPonters' "sustained focus and hard work" amid the merger and separation plans. 

EARLIER: The planned merger of DuPont Co. with the larger Dow Chemical Co. has won approval from European regulators, the companies said this morning, after DuPont agreed to split its pesticides research and development business.

Europeans had worried Dow-DuPont and its planned agricultural pesticide and crop seed development successor company would reduce research spending and push prices higher, squeezing European farmers.

(Dow and DuPont also plan a materials company, based mostly on non-ag Dow business lines, and a "specialty" company from DuPont's electronics, safety-materials, yogurt-cultures and other DuPont lines.)

ALSO: Reporting to Jean Pougnier, senior officers in the DuPont spin-off company, which employees are already nicknaming "DivestCo" or "RemedyCo," include, among others: Ravinder Balain, Asia Pacific business leader; Sebastia Pons, Europe-Middle East-Africa; Marcelo Okamura, Latin America; Phillip Hathcock, North America; Brad Gollhart, Global Operations.

Also: Kathy Shelton, Global R&D; Rolfe Ambach, Herbicides Global Marketing; Robert Alber; Insecticides Global Marketing; Cori Anne Natoli, Communications; Pete Thomas, Demand Leader and Hold Separate Project Leader; Mark Blythe, Finance; Mark Kuller, Legal Counsel; Henry Shaw, HR. Mazars Group has been appointed European Union Monitoring Trustee to keep the company's secrets.

Collins and Glenn concluded that they hope for a "seamless transition" for customers.