US stocks are mostly lower at midday as an early gain fades

Dow shares rose 12 percent to close at $56.97.

According to Bloomberg, the number of potential agriculture-chemical deals approached a 12-year high in 2015.

The chemical giants, which each have a market capitalization of about $60 billion, could announce a merger in coming days, people familiar with the matter said.

“I think a deal like this couldn’t have happened 3-6 months ago”, said Sachin Shah, a merger arbitrage strategist at Albert Fried & Co, noting the companies’ sluggish stock performance had made a deal more doable.

If DD and DOW do merge they will become the world’s second largest chemical company behind Germany’s BASF (BASFY: ADR), and comparing all three stocks over the past year paints a revealing picture.

Now, as the shares of these companies are already up substantially on the merger rumors, how can investors play this news?

Dow Chemical Co (NYSE:DOW) Merger talks with DuPont to create a chemicals titan with a $130 billion market value lifted Dow shares to a record on Wednesday and put DuPont on track for its biggest daily gain in more than six years. Mr. Liveris presented the idea he thought would bring the most value: A merger of equals followed quickly by a breakup into an agricultural company and a materials company, the people said. Nash said a new deal between DuPont and Dow could be one of the largest yet. The company’s prior CEO, Ellen Kullman, retired after fending off Nelson Peltz and Trian Fund Management LP, which sought board seats and criticized the company – and its leadership – for bloated corporate spending and a continued failure to hit earnings forecasts.

Both Dow and DuPont declined to comment for this story.

Dow India, run by Dow Chemical International Pvt.

For its part, Dow has pursued a spate of deals this year in the lead-up to talks with DuPont.

“We don’t know how much overlap there is between DuPont and Dow Chemical…But you won’t have multiple R&D departments”, KenHolsing, president of Dow North American Labor Council told The Advocate.

Dow’s chief executive Andrew Liveris is expected to be executive chairman of the merged company, while DuPont CEO Edward Breen is expected to keep that title. If the market ends down it would extend a slump into a third day. Apple fell 2.2 percent and Amazon, Facebook, Microsoft and Google parent Alphabet all lost between 1.4 percent and 1.9 percent. There’s been widespread speculation about potential deals in that industry as lower crop prices curb farmer spending, and after Monsanto’s bid for Syngenta AG, which was withdrawn in August.

After Mr. Breen found his bearings at DuPont, the two executives began talking about their entire companies, not just the agriculture units.

“India is one of the largest speciality chemicals markets in the world”, this person added. And, the two companies certainly have numerous overlapping roles.

Compared to other peers in the Chemicals – Major Diversified sector, Dow Chemical hasn’t performed in terms of quarterly revenue growth year over year at -0.16 vs. the industry average of 0.09.

But the timing could help both companies simplify the rest of their diverse business structures.

In analyst views, the appointment of Breen has been welcomed by Peltz, who has been pushing for DuPont to separate its volatile materials businesses from more stable businesses and save $2 billion to $4 billion in annual costs.