Meet DowDuPont: The New $130 Billion Chemical Mega-Company

dowdupont

NEW YORK — (CNN) In a merger that creates the world’s largest chemical company, Dow Chemical and DuPont are forming DowDuPont, a new industrial titan worth $130 billion.

Shortly after the new company gets together, it plans on splitting up into three new, publicly traded companies. DowDuPont says it will spin off (tax free!) an agriculture company, a material sciences company and a specialty products company.

Agriculture: Both companies have major seed and crop protection businesses that compete with market leader Monsanto. Those businesses had combined sales of about $19 billion last year, besting the $15 billion that Monsanto took in during that period.

Material sciences: The biggest company of the three will make plastics, chemicals and other industrial materials. For example, Dow has a large consumer brand that makes chemicals for shampoo and shoe soles. DuPont makes fabrics, including Kevlar bullet-proof vests, Nomex chemical suits and Tyvek home wrap. All those materials businesses recorded $51 billion in sales last year.

Specialty products: All of the products that fit into the “other” category will be part of the new specialty products business. That includes all those funky-sounding ingredients in food (guar gum!) that DuPont specializes in, as well as Dow’s electronic materials business, which makes circuit boards and LED lights. Together, they brought in $13 billion in sales last year.

Combining Dow Chemical and DuPont has been rumored for years, but the stars never quite aligned until now. The companies say the deal will save them at least $3 billion over the first two years of the merger.

DuPont CEO Edward Breen will become the new CEO of DowDuPont. Dow Chemical CEO Andrew Liveris will be the company’s new chairman.

In a statement, the companies said that they faced “tectonic shifts” in the chemical industry that have required them to transform to meet customers’ changing needs.

“This transaction is a game-changer for our industry,” Liveris said in a statement.

The-CNN-Wire ™ & © 2015 Cable News Network, Inc., a Time Warner Company. All rights reserved.

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