Dow Chemical and DuPont agree on merger of equals

Dow Chemical and DuPont have agreed to a merger that will create a combined company with a market capitalisation of around $130bn.

Under the terms of the transaction, Dow shareholders will receive one share in the new company, DowDuPont, for each one of their shares, while DuPont holders will receive 1.282 shares for each of theirs.

Each company’s shareholders will have an equal stake in the combined entity.

The companies said the transaction is expected to deliver around $3bn in cost synergies, with 10% of the run-rate cost synergies achieved within the first 24 months after the deal closes.

Once both companies are combined, they will be split into three, independent, publicly-traded companies: an agriculture group, a material science company and a specialty products business.

Dow's chairman and chief executive officer, Andrew N. Liveris, said: "This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders.

"This merger of equals significantly enhances the growth profile for both companies, while driving value for all of our shareholders and our customers."

Upon completion of the deal, Liveris, who is president, chairman and CEO of Dow, will become executive chairman of the newly formed DowDuPont board.

DuPont chairman and chief executive Edward D. Breen will become chief executive officer of the newly formed group.

The deal, which still needs regulatory approval, is expected to be completed by the second half of next year.

At 1225 GMT, DuPont shares were down 3.1% to $72.12 while Dow Chemical shares were 0.8% higher at $55.35.