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Asset sales plan secures EU backing for $130 bln Dow, DuPont merger


Dow Chemical and DuPont won the blessing of the European Union for their $130 billion merger on Monday by agreeing to sell substantial assets including key research and development activities. The European Commission had been concerned that the merger of two of the biggest and oldest U.S. chemical producers would leave few incentives to produce new herbicides and pesticides in the future. The deal is one of a trio of mega mergers that will reshape the industry and consolidate six companies into three. Asset sales would ensure competition in the sector and benefit European farmers and consumers, the Commission said."We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment," European Competition Commissioner Margrethe Vestager said in a statement."Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future."The two other big deals in the industry are ChemChina's [CNNCC. UL] $43 billion bid for Syngenta and Bayer's acquisition of Monsanto. Dow and DuPont said they were still on target for $3 billion in cost synergies and $1 billion in growth benefits. The deal is still to be approved by regulators in the United States, Brazil, China, Australia and Canada, but the companies said they were confident of clearance in all remaining jurisdictions."This regulatory milestone is a significant step toward closing the merger transaction, with the intention to subsequently spin into three independent publicly traded companies," Dow spokeswoman Rachelle Schikorra said in an email.

The EU approval may be a sign that U.S. regulators would follow suit because the agencies have traditionally coordinated on reviews and remedies for large multinational mergers, said Diana Moss, president of the American Antitrust Institute non-profit group. However, any required asset sales would likely reflect antitrust concerns in the local marketplace."In the U.S., there are very high shares in corn and soybean seeds. We would expect those problems to be significant enough for enforcers in the U.S. to remedy them," Moss said. WEIGHTY DECISION The 1,000-page decision underlined the significance of the merger. In return for the EU green light, DuPont will divest large parts of its global pesticides business, including its global research and development organization.

The unit makes herbicides for cereals, oilseed rape, sunflower, rice and pasture and insecticides for insect control for fruits and vegetables. Dow, in turn, will sell two acid co-polymer manufacturing facilities in Spain and the United States, as well as a contract with a third party through which it buys ionomers. The company has already found a buyer in South Korea's SK Innovation."The main surprises here are the inclusion of the pesticides and the exclusion of any kind of seed assets," Bernstein analysts wrote in a note. The analysts also said they had expected EU to be concerned about the concentration of seed sales, and that they would require Dow to divest its corn seeds business."We see the required divestments here as smaller than we originally expected, due to the exclusion of seed assets".

Funds historically bearish ahead of Friday's USDA planting data: Braun CHICAGO Speculators may head into Friday’s U.S. planting intentions with the most bearish overall attitude toward Chicago-traded grains and oilseeds since the CFTC revised the format of its Commitments of Traders report - which measures the money flows in and out of the commodities market - a decade ago.

Another turn of the screw for the London lead market: Andy Home This is a truism for any metal stored in London Metal Exchange (LME) warehouses but it is particularly relevant in the lead market right now.

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Choppy day on Wall Street; all eyes on Trump and healthcare


Wall Street ended mixed after a choppy session on Wednesday as investors focused on President Donald Trump's struggle to push through a healthcare bill and snapped up stocks after a steep drop the day before. U.S. stocks in the previous session had suffered their worst day since before Trump's election as investors worried that the president's difficulty in overhauling healthcare was a sign he would also face trouble pushing through promised corporate tax cuts that have been behind the market's record-breaking rally since November. Stocks fell early in the day but later moved higher. Apple (AAPL. O) rose 1.7 percent and provided the biggest boost to the three major indexes."Investors with a lot of cash used yesterday's downturn and the morning's weakness today as a buying opportunity," said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates in Toledo, Ohio. Trump and Republican lawmakers appeared to be losing the support they need for controversial healthcare legislation scheduled for a vote in the House of Representatives on Thursday. Losing or delaying the vote would bruise investors' confidence in Trump's legislative ability and his ability to keep his big promises to business. "If that happens, you could see a little bit of volatility in the market," said David Schiegoleit, managing director at U.S. Bank Private Client Reserve in Los Angeles. The Dow was weighed down by a 7.05-percent fall in Nike (NKE. N) after the world's largest footwear maker missed quarterly revenue estimates.

Oil prices touched four-month lows after data showed U.S. crude inventories rising faster than expected. The S&P 500 has gained 10 percent since the election, spurred mainly by Trump's agenda of tax cuts and infrastructure spending, but high valuations remain a concern. The benchmark index is trading at about 18 times expected earnings compared to a 10-year average of 14, according to Thomson Reuters Datastream.

The Dow Jones Industrial Average . DJI declined 0.03 percent to end at 20,661.3 points, while the S&P 500 . SPX gained 0.19 percent to 2,348.45. The Nasdaq Composite . IXIC added 0.48 percent to 5,821.64. Seven of the 11 major S&P sectors rose, with the technology index's . SPLRCT 0.8 percent gain leading the advancers. The financial sector . SPSY, which on Tuesday suffered its worst daily drop since June, lost another 0.2 percent.

Trump Tantrum looms on Wall Street if healthcare effort stalls NEW YORK The Trump Trade could start looking more like a Trump Tantrum if the new U.S. administration's healthcare bill stalls in Congress, prompting worries on Wall Street about tax cuts and other measures aimed at promoting economic growth.

Hospital, Medicaid insurer shares set for volatility as health vote nears NEW YORK The slumping U.S. healthcare stocks at the center of efforts to dismantle the Affordable Care Act are expected to stay volatile as Republican legislation heads into a vote on Thursday that could signal how protracted their battle to repeal the law will be.

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