Dow Chemical 2015 Annual Report Download - page 153

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NOTE 27 – PLANNED MERGER WITH DUPONT
On December 11, 2015, the Company and DuPont entered into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which Dow and DuPont have agreed, subject to the terms and conditions of the Merger Agreement, to effect an all-
stock, merger of equals strategic combination of their respective businesses by: (i) forming Diamond-Orion HoldCo, Inc., a
Delaware corporation that is jointly owned by Dow and DuPont ("HoldCo"), (ii) Dow merging with a newly formed, wholly
owned direct subsidiary of HoldCo, with Dow surviving such merger as a direct, wholly owned subsidiary of HoldCo (the
"Dow Merger"), (iii) DuPont merging with a newly formed, wholly owned direct subsidiary of HoldCo, with DuPont surviving
such merger as a direct, wholly owned subsidiary of HoldCo (the "DuPont Merger" and, together with the Dow Merger, the
"Mergers"), and (iv) prior to or as of the effective time of the Mergers (the "Effective Time"), changing the name of HoldCo to
be DowDuPont. Following the consummation of the Mergers, Dow and DuPont intend to pursue, subject to the receipt of
regulatory approvals and approval by the board of directors of HoldCo, the separation of the combined company’s agriculture
business, specialty products business and material science business through one or more tax-efficient transactions.
Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, each share of common stock, par
value $2.50 per share, of Dow (the "Dow Common Stock") issued and outstanding immediately prior to the Effective Time
(excluding any shares of Dow Common Stock that are held in treasury) will be converted into the right to receive one share of
common stock, par value $0.01 per share, of HoldCo (the "HoldCo Common Stock"), and each share of Cumulative
Convertible Perpetual Preferred Stock, Series A, par value $1.00 per share, of Dow (the "Dow Preferred") issued and
outstanding immediately prior to the Effective Time will be automatically canceled and each holder of shares of Dow Preferred
will be deemed to hold the same number of shares of preferred, par value $0.01 per share, stock of HoldCo on equivalent terms.
Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, each share of common stock, par
value $0.30 per share, of DuPont (the "DuPont Common Stock") issued and outstanding immediately prior to the Effective
Time (excluding any shares of DuPont Common Stock that are held in treasury) will be converted into the right to receive
1.2820 shares of HoldCo Common Stock, and each share of DuPont Preferred Stock—$4.50 Series and DuPont Preferred
Stock—$3.50 Series, in each case issued and outstanding immediately prior to the Effective Time shall remain issued and
outstanding and be unaffected by the Mergers. The aforementioned 1.2820 exchange ratio set forth in the Merger Agreement
will result in Dow common stockholders and DuPont common stockholders each owning approximately 50 percent of the
outstanding shares of HoldCo Common Stock immediately following the Effective Time, excluding the shares of Dow
Preferred.
The Merger Agreement provides that, at the Effective Time, the Dow stock options and other equity awards and the DuPont
stock options and other equity awards generally will automatically convert into stock options and equity awards with respect to
HoldCo Common Stock, on the same terms and conditions under the applicable plans and award agreements immediately prior
to the Effective Time and, in the case of DuPont stock options and equity awards, after giving effect to the exchange ratio and
appropriate adjustments to reflect the consummation of the Mergers.
After the Effective Time, HoldCo Common Stock will be listed on the New York Stock Exchange ("NYSE").
The Company expects the Mergers to close in the second half of 2016, subject to customary closing conditions. The completion
of the Mergers is subject to the satisfaction or waiver of certain conditions, including (i) the adoption of the Merger Agreement
by the affirmative vote of the holders of a majority of all outstanding shares of Dow Common Stock entitled to vote thereon;
(ii) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of all outstanding shares of
DuPont Common Stock entitled to vote thereon; (iii) the receipt of certain domestic and foreign approvals under competition
laws; (iv) Dow and DuPont reasonably determining that the Dow Merger and the DuPont Merger do not constitute an
acquisition of 50 percent or greater interest in Dow and DuPont, respectively, under the principles of Section 355(e) of the
Internal Revenue Code; (v) the absence of governmental restraints or prohibitions preventing the consummation of either of the
Mergers; (vi) the effectiveness of the Form S-4 and absence of any stop order or proceedings by the U.S. Securities and
Exchange Commission; and (vii) the approval of the shares of HoldCo Common Stock to be issued in the Merger for listing on
the NYSE. The obligation of each of Dow and DuPont to consummate the Mergers is also conditioned on, among other things,
the receipt of a tax opinion from tax counsel as to the tax-free nature of each of the Mergers, and the truth and correctness of
the representations and warranties made by the other party as of the closing date, subject to certain "material" and "material
adverse effect" qualifiers.