Manufacturing & Supply Chain

Dow Chemical and DuPont are talking merger, creating a chemicals giant with a market value of more than $120 billion that could then break up into different businesses, people familiar with the matter said.

A deal, which would face regulatory approval in several countries, would allow the two U.S. companies to rejig their assets based on their diverging fortunes. Their plastics and specialty chemical businesses have benefited from lower energy costs, while their agrochemicals divisions have struggled to cope with weak demand for crop protection products.

Following what would be structured as a merger of equals, the combined company could split into material sciences, specialty products and agrochemicals, the people said.

But they cautioned that the plans have not been finalised.

Dow’s chief executive Andrew Liveris and DuPont chief executive Edward Breen would have the two top jobs in the combined company, one of the people said.

The possible merger of the companies may see cost synergies to the tune of $3 billion, CNBC said citing people familiar with the matter.

As of yesterday’s trading close, Dow had a market valuation of $58.97 billion, while DuPont DD.N was valued at $58.37 billion.

DuPont, under Breen, who took over as CEO last month, had already been in talks with rivals, including Dow, about exploring options about its agriculture business.

Dow had also been reviewing all options for its farm chemicals and seeds unit, which has reported falling sales for nearly a year.

The current chief of DuPont, Edward Breen, was appointed CEO last month after his predecessor and company veteran Ellen Kullman, resigned abruptly in October.

Breen, who was the CEO of Tyco between 2002 and 2012, and is best known as a turnaround expert, split Tyco into six companies, a sprawling conglomerate beset by scandal and strategic flipflops.

A 213-year-old company, DuPont makes products and chemicals that go into industries such as petrochemicals, pharmaceuticals, food and construction.