Dan Loeb’s Third Point Made $141 Million on Dow-DuPont Reports

The deal apparently would be followed by a breakup into three businesses: agriculture, specialty chemicals and commodity chemicals; it’s “like Pepsi and Coca-Cola merging, then splitting into syrup, bottling, and snacks and sundry businesses”, says Eric Linser of Avant-Garde Advisors. But he also said it won’t necessarily help Dow and DuPont that they want to break a combined firm into three new businesses.

Bock said the group cautions Dow shareholders about what they call DuPont’s failure to disclose important information.

The talks are taking place as both companies have grappled with collapsing commodity prices that have pressured key customers, and a strengthening US dollar that has made Dow and DuPont’s products more expensive overseas. “Despite DuPont’s maneuvers to pass these liabilities to Chemours, if the merger proceeds, Dow and DuPont may ultimately be responsible for these claims”, he said.

The proposed merger is likely to spark fears from farmers, especially in the United States, that a combination could lead to higher prices for seeds and agrochemicals. Are stakeholders of DuPont and Dow Chemical willing to risk that fate? The companies are targeting about $3 billion in cost cuts, according to people familiar with the discussions.

The company would be named DowDuPont, according to a news release from Dupont.

“We do not comment on rumors or speculation”, said Dan Turner of DuPont corporate media Relations. An agreement could be reached in the coming days, that person added. It will also be the largest seed and pesticide manufacturer, surpassing Monsanto Co.

A potential $130 billion (85.6 billion pounds) merger of Dow Chemical Co (DOW.N) and DuPont (DD.N) could prompt a renewed flurry of takeover bids for European rivals with Switzerland’s Syngenta AG (SYNN.VX) the most likely target.

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.

Chemical industry bigwigs E. I. du Pont de Nemours and Co.

Regulators could still require both companies to sell off some businesses to curb their influence in particular markets, meaning that Syngenta, Monsanto and other players could wait in the wings for pieces of the Dow DuPont agribusiness to be sold.

Based on sales, Performance Materials ranked second among DuPont’s six operating units in the nine-month period. By 2008, the agriculture unit was the company’s largest business segment, and it has been a perennial earnings leader in recent years. Dow AgroSciences had global sales of $7.3 billion in 2014, or about 12.5 percent of revenue.

Sometimes the antitrust agencies consider more than just traditional head-to-head competition between two companies that are seeking to merge.

Syngenta and other major seeds and crop chemicals companies are intensively discussing tie-ups, the Financial Times reported, quoting the Swiss firm’s chairman. So something will give here on the ag side.

Similarly, Dow CEO Andrew Liveris told analysts in October that there were “potential synergies in a newly consolidating agricultural market” regarding Dow AgroSciences. “So there’s a lot of pressure on companies to do things to increase their stock value”.

Dow and DuPont are said to be in late-stage merger talks under pressure from activist investors over a deal that would be the industry’s largest-ever merger and the latest mega-deal in a year of blockbuster tie-ups from pharmaceuticals and drug stores to beer.