DuPont and Dow Chemical Company announced to merge to form DowDuPont

Participants will include Dow’s chairman and CEO and DuPont’s chairman and CEO.

“The merger will have a limited impact on activity in either company’s location or sites”, since the firms’ products and research strengths are complementary and don’t overlap significantly, said Ry Wagner, who was the leader of global ventures and new technology at Dow Agro from 2009 to 2013.

However, DowDuPont won’t be around long.

DuPont and Dow have major footprints all across this region, from DE to New Jersey to Philadelphia to its suburbs The merger would combine two companies that sell agricultural products to millions of farmers around the world, and make a variety of chemicals for consumer and industrial products ranging from electronics, automobiles, and household goods to building materials and safety equipment.

Prior to the merger, Dupont said in a statement it will slash $700 million in costs, with ten percent of its workforce “impacted” by the move, while Dow is expected to drop $300 million in costs.

DowDuPont plans additional cost cutting once it is formed.

The companies expect to find a total of about $3 billion in cost synergies and gain $1 billion in growth synergies through the deal.

In a statement Friday, DuPont said the transaction simplifies the company’s structure because it will operate fewer but larger business units rather than several smaller segments. DuPont employs more than 60,000 people worldwide, while Dow has more than 50,000 employees.

Shares in Dow Chemical closed down 2.8 percent in NY, while DuPont fell 5.5 percent.

The agrichemical company is expected to generate $19 billion through the sale of seeds and chemical insecticides to the agricultural industry.

In addition to getting approval from investors, the deal must also get approval from government regulators in the US and other countries. Another factor has been Monsanto’s bid for Syngenta, which was withdrawn in August.

After the merger, the company plans to divide into separate entities. Dow Automotive is a leader in thermoset plastics, which can not be remolded and are used in exteriors and “in-car” products, while DuPont’s automotive unit primarily focuses on thermoplastics, which soften when heated, and various “under the hood” products.

Dow Chemical, known for its Styrofoam brand insulation products, is strongest in the plastics and industrial materials industries.

Dow Chairman and CEO Andrew N. Liveris will become executive chairman and DuPont CEO Edward D. Breen will be named CEO of combined company. “We do go into the same markets in different spots, but we don’t go head-to-head with each other today”, Dow Chief Operating Officer James R. Fitterling tells C&EN. Corning’s stock jumped the most in two years as broad equity indexes tumbled.

The release also states that after the transaction is complete, the company will be headquartered in both Midland, Michigan and Wilmington, Delaware, the current headquarter sites of Dow and DuPont, respectively.

Business Finance News believes that although the FTC is yet to take a closer closer look on the merger, both giants might close the deal after spinning-off some of their segments, if asked to do so. However, a year ago, Loeb agreed not to publically criticize Dow, an agreement that will expire in the coming days. He sees the deal as a long-term positive.

Activist investors have been pressuring both companies to split up to boost their share prices.

The all-stock merger calls for the two companies to combine as Dow DuPont, then separate into three independent publicly traded companies focused on agriculture, material science and specialty products.