NEW YORK • Chemical giants DuPont and Dow Chemical Co agreed to merge in an all-stock deal valuing the combined company at US$130 billion (S$183 billion), with plans to eventually split into three.
The deal, which is likely to face intense regulatory scrutiny, allows the new company - to be called DowDuPont - to rejig assets based on the diverging fortunes of their businesses that make agriculture chemicals and plastics.
Dow and DuPont have been struggling to cope with falling demand for farm chemicals due to falling crop prices and a strong dollar, even as their plastics businesses have thrived, thanks to low natural gas prices.
The companies said the proposed split would create businesses focused on agriculture, materials and speciality products.
Dow and DuPont shareholders will each own about 50 per cent of DowDuPont, excluding preferred shares.
DuPont chief executive officer Ed Breen will be CEO of DowDuPont, and Dow Chemical CEO Andrew Liveris will be executive chairman.
DuPont shares were down 4 per cent at US$71.50 in pre-market trading yesterday, while Dow's were up 1.5 per cent at US$55.72.
"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," Mr Liveris said in a statement.
Dow Chemical shareholders will get one DowDuPont share for each Dow Chemical share held, while DuPont shareholders will get 1.282 shares in DowDuPont for each DuPont share they own.
The companies said the split would "occur as soon as feasible" and would likely happen 18 to 24 months after the deal closes, which is expected in the second half of next year.
The combination will help the companies save about US$3 billion in costs in the first two years, with the possibility of saving another US$1 billion, Dow and DuPont said.