Here's What Dow Chemical-DuPont Post-Breakup Might Look Like

  • Companies said to be talking about a merger, then 3-way split
  • Would create new companies in agriculture, specialty chemicals

Dow Chemical-DuPont: Deep Dive Into a Mega-Merger

A merger of DuPont Co. and Dow Chemical Co. would create a company with a market capitalization of about $120 billion and wide influence over an exceptionally broad chemicals market that ranges from genetically modified seeds to food packaging products and the fibers in bullet-proof vests.

The deal, according to people familiar with the plan, would be followed by a breakup of the company into three businesses: agriculture, specialty chemicals, and commodity chemicals. While further details have yet to emerge, here’s a look at what those three new companies would look like.

  • Agricultural products:
    • Both DuPont and Dow produce genetically modified seeds. DuPont’s most popular product is its corn seed. Dow supplies seed and herbicide.
    • Combined, the new business would be the world’s largest seed and pesticide company, surpassing Monsanto Co.
    • DuPont’s agriculture business accounted for $9.2 billion of revenue in the first nine months of 2015, or 41 percent of total sales, according to data compiled by Bloomberg. Dow’s unit had $4.8 billion of sales, for 13 percent of the total.

  • Commodity chemicals:
    • Both companies make plastics used for autos.
    • DuPont, known for inventing nylon and Kevlar, which is used in bullet-proof vests, has sold off most of its commodity-chemical assets in recent years.
    • Dow’s largest source of revenue in 2015 has been its performance plastics business, which generated $13.7 billion from sales of raw materials used in food packaging and shopping bags.

  • Specialty products:
    • Both companies produce materials used to make solar panels.
    • DuPont is also known for its flame-resistant Nomex fiber and its Corian countertops. It also makes Tyvek “housewrap” used in construction. Dow has a similar product.
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