Dow and DuPont agree to merge in an all-stock deal that values the combined company at $130 billion. Both companies had been under pressure by activist investors. Shartia Brantley reports.
Consolidation in the chemicals industry. It's official. DuPont and Dow Chemical agreeing to merge in an all-stock deal valuing the combined company at $130 billion. This follows reports earlier this week that the two were in talks. The new entity will be called DowDuPont but may not exist for long as the plan is to split into three companies with a focus on agriculture, materials and specialty products. Both companies have been under pressure by activist investors pushing for similar moves. Dow and DuPont shareholders will own about fifty percent of DowDuPont. DuPont chief executive Ed Breen will become CEO, while Dow Chemical CEO Andrew Liveris will serve as executive chairman. Dow Chemical Chairman and CEO Andrew Liveris said: "Over the last decade, our entire industry has experienced tectonic shifts as an evolving world presented complex challenges and opportunities, requiring each company to exercise foresight, agility and focus on execution." An estimated $3 billion in cost synergies are expected. DowDuPont will maintain dual headquarters in Michigan and Delaware. In a separate statement, DuPont said it would cut $700 million in costs in 2016, which may impact ten percent of its workforce. The deal, which may face regulatory scrutiny, is expected to close in the second half of 2016. Shares of both companies were down in early trading.