It is known as DowDuPont.
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The planned split would create businesses focused on farming, materials and specialty products and it is to be called DowDuPont.
The merger, if it goes through, is expected to slash numerous jobs.
Getting all their big news out at once, Dow announced a $4.8 billion buyout of Corning’s stake in the Dow Corning silicones joint venture, and DuPont unveiled a 10% reduction in its workforce, a move meant to save $700 million in annual costs. Investors worry that the continuing drop in the price of oil is a result of weakness in the global economy, especially China, and could further cut profits at big energy companies, which have already been decimated this year.
Despite the eventual breakup, the deal would undergo rigorous antitrust scrutiny for all three companies, particularly the agricultural chemicals company. Activist investors often put improving a company’s stock price ahead of workers needs and community investment. Dow Automotive is a leader in thermoset plastics, which can not be remolded and are used in exteriors and “in-car” products, while DuPont’s automotive unit primarily focuses on thermoplastics, which soften when heated, and various “under the hood” products.
Strategic investors – companies buying another generally for business growth purposes – were the most frequent deal-makers in large corporate acquisitions, the PetskyPrunier report said.
That planned post-merger split into three separate companies makes it unclear how much of a footprint DuPont will maintain in the First State. The segment’s combined pro forma 2014 revenue will be around $19 billion, as per the press release.
Although they’re not splashy consumer brands, Dow Chemical and DuPont manufacture a variety of products that consumers and businesses use every day, including automobiles, apparel, electronics, household goods, personal-care products and safety equipment.
The specialty products firm, with about $13 billion in projected sales, will combine Dow and DuPont businesses in electronic materials. The agreement will lead to $3 billion in cost savings, the companies said.
Under the terms of the transaction, Dow shareholders will receive a fixed exchange ratio of 1.00 share of DowDuPont for each Dow share. The new board will include eight directors from each company.
The merger brings to a close a record year for deal-making, surpassing a levels unseen since 2007.
Dow Chemical Co. and Dupont Co., American companies that are 118 and 213 years old, respectively, announced the blockbuster, tax-free deal that would take two years to complete on Friday.
“It’s clear there are some redundancies, but I don’t think they are as large as they could be if two other companies were merging”, said Wagner, who is now CEO of the ag technology company Agrinos in Davis, California.
The combined revenue for the materials business was about 51 billion in 2014 on an adjusted basis. Instead it will invest in a semiconductor business that is owned by Dow Corning.
Dow harks back to 1897, after Herbert Henry Dow discovered a new way to extract the element bromine – then a useful ingredient in medicine and photographic materials – from brine located in wells around Midland, Michigan, its current base. DuPont was founded in 1802 in DE by Eleuthere Irenee du Pont, a French political economist who had fled to the United States during the French Revolution.
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The new company would have dual headquarters in Wilmington, Del., and Midland, Mich.
