Dow Chemical Co., and DuPont have agreed to an all-stock merger of equals that values the combined company at $130 billion, before it eventually splits into three separate companies. The combined company, which would be called DowDuPont, will split into companies focusing on agricultural chemicals, specialty products and materials, reported Reuters. This would allow the companies to choose the best products in their research pipeline and shutter the rest, experts say.
Once the new company is formed, Dow's Chief Executive Andrew Liveris will become its executive chairman, while DuPont Chief Executive Edward Breen will retain his CEO title. It's still unclear who will run the newly formed companies following the three-way breakup.
"This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders," Liveris said in a statement.
As a merger of equals, Dow and DuPont shareholders will each own 50 percent of the combined company, reported The Wall Street Journal. For this to work, Dow Chemical shareholders will get 1 share in the new company for each preexisting share they own, while DuPont shareholders will get 1.282 for each.
Despite the eventual breakup, the deal is likely to face extreme regulatory scrutiny for all three companies, especially the proposed agricultural chemicals company, according to the New York Times.
Both companies' stocks went down just after the opening bell with Dow going down 3 percent and Dupont down 6 percent.
