EU Clears Merger of Dow with Bayer Business Unit

22-Jun-07

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Wolff Walsrode of Germany by Dow Chemical Corporation of the US. The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. Both Dow and Wolff are active on the markets for cellulose ethers (synthetic plastics made from cellulose, also known as cellulosics). Their product ranges overlap only in methylcellulose ("MC") and derivatives ("MC&D"), which are the commercially most significant cellulose ethers. MC&D are mainly used in building materials, but they are also used in the production of pharmaceuticals, food and personal care applications. The Commission's examination of the proposed deal focused on the EEA market for MC&D, where the combined entity would become a market leader. However, in view of the presence of three significant competitors, Shin-Etsu/Tylose, Hercules/Aqualon and Samsung, and indications of increasing imports and capacity levels, the Commission concluded that the new market leader would continue to face effective competition. Dow Chemical Corporation is the ultimate parent company of the Dow group of companies, which are active in plastics and chemicals, agricultural sciences and hydrocarbon and energy products and services. Wolff Walsrode is a German manufacturer and supplier of cellulosics (synthetic plastics made from cellulose) through its Wolff Cellulosics business unit, and of fibrous and plastic casings through its Walsroder Casings business unit. Wolff currently belongs to Bayer AG, a global company active in health care, nutrition and high-tech materials and headquartered in Germany.