The declines in the Dow Chemical and E I DuPont De Nemours & Co. (NYSE: DD) stock prices today were a "sell on the news" reaction. Shares of both companies rallied earlier in the week amid reports that the merger of equals was close.
Dow shareholders will receive one share of the new combined company for every one of their shares. DuPont shareholders will receive 1.282 shares each.
The combined company will be known as DowDuPont. Once combined, the plan is to split into three separate companies. The three are:
- Agriculture: A pure-play agriculture company that unites DuPont's and Dow's seed and crop protection businesses. Projected revenue is $19 billion.
- Material Science: A pure-play industrial leader with revenue of $51 billion. This unit will consist of DuPont's performance materials segment and Dow's performance plastics, performance materials and chemicals, infrastructure solutions, and consumer solutions segments.
- Specialty Products: The entity will include DuPont's nutrition and health, industrial biosciences, safety and protection, and electronics and communications. Dow's electronic materials business will also be included. Projected revenue is $13 billion.
The two companies generated a cumulative $92 billion in sales in 2014. Once joined, DowDuPont will be the world's second-largest chemical company in terms of revenue. BASF of Germany is first.
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