Dow Chemical, DuPont Announce 'Merger Of Equals'
DAVID GREENE, HOST:
This morning, two giants of American industry have decided to tie the knot. DuPont and Dow Chemical say they will merge in a partnership of equals. It's a $130 billion deal that would reach deep into agriculture and the world of chemicals. NPR's Jim Zarroli is on the line from New York. Good morning, Jim.
JIM ZARROLI, BYLINE: Good morning.
GREENE: So why are these historic companies giving up their independence here and coming together?
ZARROLI: I think it's really an effort to respond to pressure from shareholders. I mean, this has not been a good market for all the different kinds of products these companies sell. Commodity prices are down, the global economy has slowed down. Both of these companies have faced campaigns from activist shareholders who were unhappy with the way they were performing, wanted to split up the companies and have them focus on their more profitable product lines. So a merger is supposed to create a more efficient corporate structure that will be more focused, that will save money in the long run.
GREENE: I know it's just been announced, but any idea, you know, what the company will be called and what the new company will look like?
ZARROLI: Yeah, this is a somewhat unusual arrangement. The two companies will be combined into one company called Dow DuPont. But then within two years, this company will be split into three separate companies - one for material sciences such as plastics and metals, one for specialty products and then one for agricultural products, which is the seed and crop business and considered sort of the most promising. So the idea is you have these really big companies that do a lot of different things and sort of have lost their focus, then you rearrange them and concentrate on, you know, what they do best - you have better companies that will be more efficient. There should be some layoffs - about 10 percent of the workforce. But often some of those people are then re-hired back after the reorganization.
GREENE: I mean, these companies reach into so many different sectors and markets. I mean, are there just going to be a ton of questions for antitrust lawyers here?
ZARROLI: Yeah, there always are some. But I think the general feeling is there isn't as much overlap in these product lines as you would expect. And that's what antitrust regulators look at. They look at, you know, how will this effect competition for specific products? Also, by splitting into three companies, that will probably appease a lot of the competition concerns. I mean, you won't have one huge company that's so dominant in each area. Of course, the Obama administration has become a lot more skeptical of these kinds of big mergers, so we'll see.
GREENE: All right, NPR's Jim Zarroli on the news this morning that two huge companies, DuPont and Dow Chemical, say they plan a merger. Jim, thanks a lot.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.