Dow Chemical to buy remaining stake in JV with Corning

The three-way split is likely to be 18 to 24 months after the deal closes, which is expected in the second half of 2016.

The new company, DowDuPont, in the future may split off into an agriculture company, a material science company and a specialty products company.

DuPont, founded in 1802, makes products used in petrochemicals, pharmaceuticals, food and construction.

Frank Mitsch of Wells Fargo Securities called the transaction “the deal of three centuries” on the companies’ call with investors on Friday morning, saying that he knew the merger had been a long time in the making. The companies “have historically unprecedented power over world agriculture, enabling them to control the agricultural research agenda, heavily influence trade and agricultural agreements and subvert market competition”, the organization says. They also emphasized that the combination and restructuring would avoid taxes, adding to the benefit for shareholders. CEO Andrew Liveris, 61, will become executive chairman. “We believe this is the right way”.

Upon completion of the transaction, Liveris, President, Chairman and CEO of Dow, will become Executive Chairman of the newly formed DowDuPont Board of Directors and Breen, Chair and CEO of DuPont, will become Chief Executive Officer of DowDuPont. The company will have dual headquarters in MI and DE where the two companies are now based. The leadership and location of the three eventual companies hasn’t been decided.

Until the three firms are spun off, Liveris will have oversight over the businesses designated for the materials unit, while Breen will be responsible for agriculture and specialty products.

Oxgaard said there are a few areas of overlap – both sell corn seed, for example – where divestitures might be necessary. “Now I would be surprised if we have 5,000”, Robb said.

Wagner, the former Dow Agro R&D leader, said there may be redundancies in the field staffs of the two companies that run trials on new products or that handle the regulatory issues involved in bringing new products to market. DuPont’s ag business has more than $11 billion in sales last year, while Dow Agro has about $7 billion per year.

“I have also coveted the transaction”, said Breen.

The formal announcement drew a lukewarm reception from investors Friday.

DuPont shares were down over 1 percent in early trading on Friday, while Dow’s were down over 4 percent. Further reductions are likely as the combined company streamlines ahead of its planned breakup. Dow Chemical’s stock fell $1.70 a share, or 3.1 percent, to $53.21.

Shares of both companies surged Wednesday when news of the looming merger first leaked out.

A deal would be one of the biggest in a year marked by big deals.

Dow Chemical shareholders will get one DowDuPont share for each Dow Chemical share they hold, while DuPont shareholders will get 1.282 shares in DowDuPont for each DuPont share they own. That’s above the price at which the company can convert Buffett’s $3 billion preferred stake into common stock that pays a lower dividend.

What has been rumored is now reality, DOW and DuPont are merging in one of the biggest mergers in the nation’s history.