It’s fair to say that not everyone is as quite as enthusiastic about the proposed $130bn 'merger of equals' between of Dow and DuPont as Dr Li Yongjing.
In the past two months both the EU Commission and a US Senate committee have expressed concerns about the deal, citing competition and consumer interest fears, largely in the agricultural space where the two firms are global powerhouses.
Part of the reason for the regulators’ reticence is the number of other mergers on the cards since the DuPont and Dow deal was approved by shareholders last December, with Bayer offering to buy Monsanto and The China National Chemical Corp seeking to take over Syngenta.
Nevertheless, from a health and nutrition perspective, DuPont’s regional president sees nothing but positives, especially now the initial shockwaves have subsided.
“We are going through a big change at the moment,” he concedes when we met at Fi Asia in Jakarta, “but nutrition and health will be one of the key divisions going forward.”
Under the proposed DowDuPont structure, the combined entity will be divided into three “pure-play” companies, agriculture, materials and specialty.
Dr Li points out that the nutrition and health business, which oversees ingredients and supplements, will sit within the specialty company as one of its five divisions, and adds it will be entering the new organisation on a strong footing.
“Our first half profit in nutrition and health improved globally by 38% making us the star performer in the DuPont family,” he says.
He doesn’t give a precise figure for the growth level in APAC, but says it is in “double-digits”, a respectable return given that it came on the back of the merger uncertainty, something Dr Li is willing to acknowledge.
“In the beginning the merger caused some turbulence and worry,” he adds. “But we have been through that period already. We have had our restructure and [taken] our actions so the organisation is on firm ground.”
It has been widely reported that the new DowDupont venture will target $3bn of synergy savings, but Dr Li maintains not a single cent of that is earmarked to come from nutrition and health.
“There are $3bn synergy savings, but that saving has absolutely nothing to do with nutrition and health,” he says. “We were not touched, so we are solid going forward.”
Health and Wellness
Part of the communication strategy at Fi Asia last week was to reinforce that very point to customers and potential clients.
While from a product perspective the company was focusing on its health and wellness solutions for bakery and dairy, alongside the launch of its SUPRO XT 221D isolated soy protein for beverages, Dr Li was clearly eager to deliver some broader business messages around stability and investment as the merger rumbles on in the background.
On the back of this year’s strong trading figures so far and the absence of the need to find savings, he says DuPont will be ramping up its nutrition investment, especially in South East Asia.
“We don’t just want to tell people it is business as usual, we want to tell them it will be better than ever.
“We will reinvest in nutrition and health so this show is a very important communication tool for us with the industry and our customers. We want to tell the industry we are here for the long term to help them grow.”
Much of the regional investment is likely to be centered on Singapore where it recently opened an 11,000 square-metre headquarters to house its administrative offices and development labs across its nutrition and health, bio-based industrials and agriculture divisions.
This was not DuPont’s first foray into Singapore—it set up an office there 43 years ago, but the new full-service base is also charged with better serving the wider Asean region, where the firm has eight offices and 13 production plants across its various businesses.
Closer to customers
Dr Li says supplements, bakery and dairy will be of particular focus regionally in the coming year. He hopes to bolster the team in Singapore from around 50 to 60 in the coming months to help focus on these areas, while also getting more people out on the ground in other ASEAN countries.
“We may not have the ASEAN region as covered as well as we should so we are investing more to get closer to our customers. In the markets, we should increase investment in Indonesia, Philippines, Myanmar, Thailand and Vietnam. This is a booming geographical area,” he adds.
And he maintains that the proposed merger, far from creating a large and unwieldy entity, will actually better enable the company to respond to emerging Asian markets from a health and nutrition perspective.
“Sometimes we are a little bit slow because of the size of the company [DuPont] at the moment. Going forward we are actually demerging and will become three companies [agriculture, materials and specialty].
“We expect to have a much leaner corporate structure so we can be more flexible and move faster. This will be a huge advantage in fast-moving emerging markets in this region.”
In part two of our interview with Dr Li, to be published next week, we discuss the supplements landscape in South East Asia and assess the new regulatory regime in China.