Another big merger? This time we’re talking chemicals
A reported merger between Dow Chemical and DuPont would be one of the largest deals in a year that’s already seen $4 trillion worth of mergers and acquisitions.
On the surface, the deal looks like it would create one massive chemical company, but it could actually be an attempt by both to become leaner and more focused. Erik Gordon, a professor at the University of Michigan’s Ross school of business, said the move is in line with many of the other mergers this year.
“Well, the fashion these days is that companies focus themselves instead of diversify,” he said. “You’re out of fashion even if you’re in different segments in just one industry. These companies are in a lot of segments in the chemicals industry.”
The plan could break the company up into three distinct businesses – one in commodities, one creating specialty products like Kevlar and Teflon and a third for agriculture chemicals.
Neither company would comment on the talks and the deal is by no means final.
A deal of this size might also have trouble getting past antitrust regulators. Case in point: GE had to back off the sale of its appliance division to Electrolux earlier this week.
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