DuPont Co. got a boost from U.S. farmers as it closes in on the historic $75 billion merger with Dow Chemical Co. next month.
Seed sales climbed in the second quarter as DuPont introduced new varieties of soybeans in North America, while pesticide revenue jumped on demand for new fungicides and insecticides, the company said in a statement Tuesday.
DuPont is benefiting as North American farmers sow a record soybean crop after enduring years of low corn prices. U.S. growers are on course to increase soybean acreage 7 percent this year, according to the Department of Agriculture. Seed gains drove an 11 percent increase in farm-related earnings, accounting for more than half of total profit at DuPont.
Chief Executive Officer Ed Breen is poised to close the merger of equals with Dow next month after prior delays in gaining antitrust clearances pushed back the original completion date from December 2016. Breen struck the deal in December 2015, the month after taking the helm at Wilmington, Delaware-based DuPont.
“We are down to literally the last yards here to punch the ball into the end zone,” Breen said on an earnings conference call. “We will close the merger in August.”
The companies are awaiting final antitrust approvals from the European Commission and Brazil, Breen said.
DuPont rose 1.2 percent to $85.34 at 8:48 a.m. in New York before the start of regular trading. The shares climbed 15 percent this year through Monday, compared with an 11 percent advance for an S&P 500 materials index.
Adjusted earnings rose to $1.38 a share, topping the $1.29 average of analysts’ estimates compiled by Bloomberg. The results extended Breen’s record of exceeding analysts’ expectations in each quarter since joining DuPont.
Revenue climbed 5.1 percent to $7.42 billion, beating the $7.3 billion average estimate. Sales volumes were up 6 percent and prices on average fell 1 percent.
Operating earnings rose in all six business segments. Profit jumped 25 percent in electronics and communication on demand for materials used in solar panels and semiconductors. The industrial biosciences unit posted a similar increase on strong sales of plant-derived Sorona clothing and carpets.
Breen, who is also DuPont’s chairman, will be CEO of the merged company, to be called DowDuPont Inc. Dow’s chairman and CEO, Andrew Liveris, will be chairman.
The companies have won antitrust approvals from every major jurisdiction where they operate by promising a series of divestitures. DuPont is selling some pesticide assets to FMC Corp., while Dow will unload some corn-seed assets in Brazil to a Chinese investment fund. The asset buyers still need to be approved by some regulators before the deal can close.
Dow and DuPont are planning to split the merged company into three within 18 months of closing, with the first spinoff set to be a materials-science company that will retain the Dow name.
The other two post-split companies will focus on agriculture and specialty products. The companies have said DowDuPont will reconsider which businesses will constitute each spinoff after investors including Third Point raised concerns that proposed materials-science and specialty companies aren’t sufficiently focused.
(Updates with Breen comment in fifth paragraph.)
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