Earlier this month, DuPont and Dow Chemical announced an all-stock merger valued at $130 billion. The union will be split into three new companies: a materials science company; a specialty products company targeting the electronics, communications, safety and protection industries; and an agriculture firm. Dow shareholders will own 52% of the new company, while DuPont shareholders will own 48%. According to analysts, potential tax savings, falling demand for farm chemicals and few growth opportunities are key reasons for the merger. Though the deal will generate tax savings and trigger industry-wide consolidations, it is also predicted to undergo scrutiny by regulators, especially their agricultural businesses. The deal pressures competitors, such as Honeywell, 3M and BASF, to consider consolidation. The largest impact of the merger will be on the agricultural market, where many seed and crop chemical companies may have to merge. The merger may also prompt takeover bids for European competitors, such as Syngenta. Critics are encouraging the US Department of Justice to block the merger, stating that it will limit the choices that farmers have by creating a duopoly of the new company and Monsanto.

Source: Reuters