Dow and DuPont Confirm Merger

In a stunning series of announcements this morning, Dow Chemical and DuPont confirmed earlier rumors that they will merge into a chemical giant valued at $130 billion. The new company will be short lived, however, as it plans to break up into three specialized companies—in agriculture, materials science, and specialty products—within 18–24 months of the closure of the deal.

Not anticipated by the earlier reports is a concurrent plan for Dow to buy out Corning in their Dow Corning silicones joint venture. The Hemlock Semiconductor polysilicon venture will remain owned by Dow and Corning. Separately, DuPont announced a $700 million cost-cutting effort that will eliminate about 10% of its workforce.

Dow and DuPont anticipate realizing $3 billion in cost savings and about $1 billion in what it calls growth synergies. Further job cuts will undoubtedly play a role in the savings effort.

Together, the actions will radically remake two of the stalwarts of the global chemical industry. The moves could spur further industry restructuring, particularly in agricultural chemicals, where other companies may be compelled to respond with mergers of their own.

Click here for C&EN’s earlier story on the rumored deal. C&EN will post a more detailed story after a conference call this morning involving the CEOs of Dow and DuPont.