Dow and Dupont to merge??

In what could be the “Mother” of all mergers, according to media reports, US-based chemicals majors Dow Chemical and DuPont, together said to be worth US$120 billion, are said to be in advanced talks of a merger. It has been reported that the so-called “monumental merger” would be followed by a three-way break-up of the combined company, a common approach to mergers and acquisitions of late. Dow’s Chief Executive Andrew Liveris is expected to be executive chairman of the new company, with DuPont CEO Edward Breen to maintain his title and position.

Whether there is a deal is also questionable and it may not go through, cautioned analysts.

Should it come to fruition, a combination of the companies, each more than a century old, would be one of the biggest in a year marked by big deals. So far, companies have struck some US$4.35 trillion of takeovers in 2015, eclipsing 2007 as the top year on record for deals, according to the Wall Street Journal (WSJ).

Both companies that have come under pressure from shareholders to slim down and focus on faster-growing units, have been restructuring their businesses by shedding some of their low-margin assets in favour of higher-margin speciality products. DuPont has exited performance paints and coatings, including the business that invented Teflon nonstick pan coating while Dow has sold off its materials units like chlorine and the epoxy.

Early this year, Dow said it would spin off a significant portion of its chlorine business to chemicals maker Olin Corp. And last year it said it would separate more of its commodity-based chemicals business, looking to focus on higher-end specialties. Since 2009, Dow has shed businesses responsible for US$15 billion in annual revenues.


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