Dow Chemical, DuPont May Merge

DuPont’s shares surged after the Wall Street Journal reported the company was in advanced merger talks with Dow Chemical, helping to partially offset negative sentiment.

Dow Chemical was up 10.4 percent at $56.19 while DuPont jumped 11.2 percent to $74.04, after reports that the companies are in talks to merge.

DOW DEAL? Dow Chemical and DuPont each jumped 11 percent after several news reports that the two chemical giants are talking of combining.

Multiple media outlets say the two companies, both of which have a strong presence in the agriculture sector, were discussing a merger, with an official announcement possible as early as Thursday. Bringing the companies together would enable them to “derive value from offering a large range of chemicals to global markets”.

A merger of DuPont and Dow, each with a market capitalization of more than $60 billion, would create the world’s second-largest chemical company, behind BASF SE.

The companies have crossed paths before, notably in 1996, when they combined their specialty rubber businesses into a 50:50 joint venture, DuPont Dow Elastomers.

Dow was founded in 1897 by Canadian-born chemist Herbert Dow to produce bleach using new technology he had developed to extract chlorine from brine.

Since it’s founding on the banks of the Brandywine River in Wilmington, DuPont has dominated the DE business scene. Dow has produced a slew of plastics and agricultural chemicals, while DuPont claims such innovations as Kevlar, Tyvek and Teflon.

Mr Breen, who took over DuPont in October, has a previous record of ownership restructuring, after a stint at the conglomerate Tyco. Benchmark U.S. crude was up 25 cents at $37.40 a barrel in electronic trading on the New York Mercantile Exchange, after falling 35 cents to close at $37.16 in New York on Wednesday. The Journal reported that Mr Liveris is expected to be executive chairman of the merged company while DuPont CEO Ed Breen would retain that title.

Last year, a former fraud investigator at Dow, Kimberly Wood, alleged that company money had financed vacations, sports junkets and other perks for Liveris and his family.

“I think a deal like this couldn’t have happened 3-6 months ago”, Albert Fried & Co merger arbitrage strategist Sachin Shah told Reuters. Instead, it would appear that a potential agricultural tie-up with Dow Chemical grew into a full merger.

In the intervening period in May, when Kullman was fending off a proxy battle from activist investor Nelson Peltz to get representation on the board, the company’s stock price fell over 25 percent, weakening her support among investors. “So there’s a lot of pressure on companies to do things to increase their stock value”.

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