UPDATE—The reports were true: DuPont and The Dow Chemical Co. will merge
WILMINGTON, DE & MIDLAND, MI—DuPont and The Dow Chemical Co. are in advanced, late stage talks to merge, according to several news outlets. A deal may be announced this week.
The Wall Street Journal reports that, if successful, the combined entity would have a market capitalization of more than $130 billion. On Tuesday, the paper said that, upon completion of the merger, the companies would immediately split into three new businesses. They would encompass:
- Agriculture
- Materials
- Specialty chemicals
The New York Times writes that such a move may not be as strange as it seems. “Companies with more clearly defined businesses can be an easier sell with investors. They are often easier to manage. The agricultural spinoff, for example, could focus on the biology needed to create new seeds. The specialty chemical offshoot would be more about chemistry. And the materials business would worry about securing the cheap gas it needs to make plastics and other products.”
But any deal would be subject to intense scrutiny, given some of the similarities in both businesses and the markets in which they operate. The Journal also reports that both companies “have spent little time on antitrust because their lawyers believe there is little concern thanks to the pending three-way split, which is intended to ease pushback.”