Dow Chemical, DuPont merger in the offing?

Several news outlets, including the Wall Street Journal and the New York Times, are reporting that Dow Chemical (Midland, MI) and DuPont (Wilmington, DE), two of the largest chemicals companies and most storied brands in the United States, are discussing a merger. It would be one of the largest transactions in a year full of huge deals, writes the New York Times. The two companies, both of which have significant plastics businesses, are valued at roughly $60 billion each. If the merger goes ahead, the combined companies would be the second largest chemicals enterprise in the world, after BASF (Ludwigshafen, Germany).

Dow Chemical and DuPont have both been the targets of activist investors recently. Dow settled a dispute with Daniel S. Loeb, who runs the Third Point hedge fund, last year by appointing four independent directors to its board. And in May 2015, Dupont prevailed in a board challenge spearheaded by billionaire financier Nelson Peltz. It was the first loss for Peltz since he founded Trian Fund Management 10 years ago, reports the Times.

If the deal goes through, it could be a merger of equals, where the combined company could separate into material sciences, specialty products and agrochemicals, according to Reuters.

The advanced talks could result in an official announcement within the next few days, according to analysts. Then again, the talks could collapse. And any merger of this size and complementarity would draw fierce scrutiny from regulators.

Stay tuned.