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December 14, 2015

Scion of DuPont family calls merger with Dow "catastrophic"

DuPont plans to cut more than 5,000 jobs globally before merger

Anxiety is high over the potential impact that the upcoming merger between DuPont and Dow will have on Delaware: after DuPont announced Friday plans to cut 10 percent of its global workforce and $700 million in spending.

"I think it's catastrophic for Delaware," said Charlie Copeland, leader of the Delaware Republican Party and a descendant of the du Ponts, to Newsworks.

Copeland's ancestors founded the industrial company on the banks of the Brandywine River in 1802. At its height, the industrial giant employed more than 25,000 people in Delaware, though it now employs around 7,000 people.

It's unclear how many of the approximately 5,400 global layoffs will be in Delaware though DuPont's headquarters are expected to stay in Wilmington.

“I don’t know how you can look at a DuPont/Dow merger and not think that some number of those people -- and 10 percent is just a good start -- are going to be gone,” he said.

DuPont and Dow announced a "merger of equals" on Friday, with DuPont's CEO Edward Breen remaining as CEO of the new company. Like two stars that collide and then split apart into multiple pieces, DuPont and Dow plan to merge only to split into three separate companies within two years: one devoted to agriculture, one focused on material science and the last dedicated to specialty products.

The logic behind the merge-then-split strategy is that the firms will be able to save around $3 billion in expenses and create a more focused business approach.

"This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the combination of two highly complementary global leaders and the creation of three strong, focused, industry-leading businesses," said Breen in a statement.

However, what is the value for workers in Delaware? Commentator Dennis Berman wrote in The Wall Street Journal that the merger makes it seem as though "these two companies — absolute bedrock of U.S. industrial might — have given up faith in themselves and their futures."

"Self-confidence seems to brim only in Silicon Valley. Across the American business world, the goal is to cut costs, consolidate, do more with less," he wrote, pointing to massive mergers this year in industries as varied as pharmaceuticals, air travel and beer.

Berman cited three reasons for the merger trend: a slow-growing economy, activist investors and competition from China.

However, as University of Delaware professor Charles Elson pointed out to Newsworks, the merger still has to face hurdles from antitrust regulators in Washington.

"It’s a long road between a talk and a merger. I think at this point it’s a little premature to rule DuPont out of Delaware," said Elson.