Two of corporate America’s oldest institutions, chemical giants Dow Chemical and DuPont, will merge into a $130 billion behemoth — and then split again into three companies — in one of the largest megadeals of the year, the companies said Friday.

Since their founding in the 19th century, both companies have invented and sold some of the most transformative discoveries in modern chemistry, changing how our homes are built and painted and how our food is grown and stored.


A DuPont logo in Geneva in 2009. (REUTERS/Denis Balibouse)

Their innovations include a sweeping variety of now-ubiquitous chemicals, including the Kevlar in bulletproof vests and the Teflon in nonstick pans, as well as chlorine, Saran Wrap and Ziploc bags.

Today, most of their business is in selling the critical building blocks for the insulation of buildings, the production of cars and the planting and harvesting of international farms. The combined company, analysts said, would be the world’s largest seed and pesticide conglomerate, controlling 17 percent of global pesticide sales and about 40 percent of America’s corn-seed and soybean markets.

[The Dow-DuPont megamerger: A deal only Wall Street could love]

The companies will stage a “merger of equals,” giving Dow and DuPont investors equal shares of the combined company, in an all-stock deal expected to finalize in late 2016, with dual headquarters in Midland, Michigan, and Wilmington, Delaware.

The resulting company, DowDuPont, will be split after 18 to 24 months via tax-free spin-offs into three independent, public companies focused on agriculture, including seeds and pesticides; materials, including coatings, plastics and industrial chemicals; and specialty products, including chemicals key to the electronics, biosciences and health industries.

The join-and-split maneuver, analysts said, could allow the companies to more easily drop divisions or research products that offered the least upside. But even with the split, the deal is expected to face intense scrutiny from federal antitrust regulators, who could question whether the merger will dramatically raise prices or lower availability of vital seeds and herbicides.

“Any merger that consolidates this market into fewer hands will give farmers fewer choices and put them at even more economic disadvantage,” said Wenonah Hauter, executive director of the advocacy group Food & Water Watch, in a statement. “The Department of Justice needs to block this merger to prevent the further corporate control of the basic building blocks of the food supply.”

The companies, which made a combined $83 billion in global revenue last year, said the megadeal would reveal $3 billion in “cost synergies” — overlapping expenses the companies can cut within the merger’s first two years.

DuPont said it expects 10 percent of its 63,000-strong global workforce will be “impacted,” and the company is budgeting for $650 million in “employee separation costs.” Analysts also expect layoffs at Dow, which employs 53,000 worldwide.

“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” Dow chief executive Andrew Liveris said in a statement. He also called it a “seminal event for our employees.”

Both companies have battled criticism from activist investors who pushed to cut corporate spending or break up operations. And both have been pressured by a slow-growing global economy and a strengthening U.S. dollar to find ways to cut costs, including in research and personnel.

On a conference call Friday, DuPont chief executive Ed Breen said, “When I look at DuPont and Dow, I see businesses that fit together like hand in glove.”

The corporate marriage caps a record-setting year for mergers and acquisitions, following deals between pharmaceutical giants Allergan and Pfizer, megabreweries Anheuser-Busch InBev and SABMiller, and food conglomerates Kraft and H.J. Heinz. Companies have agreed to more than $4 trillion in deals this year across the world, including more than $2 trillion in the U.S., data from researcher Dealogic show.

Dow was founded in 1897 by chemist Herbert Henry Dow primarily as a seller of bleach, but it would become one of America’s chief suppliers of chemicals for explosives, medicines and tear gas during World War I. With the Monsanto Company, Dow would also produce Agent Orange, the toxic herbicide made infamous during and after the Vietnam War.

DuPont was founded in 1802 as a gunpowder mill by the French-American industrialist Éleuthère Irénée du Pont. The company would go on to develop neoprene, a synthetic rubber; corian, used in home countertops; mylar, a plastic in balloons; and the refrigerant freon.