Two of the largest and oldest companies in the American chemical industry, Dow Chemical and DuPont, plan to merge in what will be considered one of the largest transactions in a year full of huge deals. The two companies, whose research has brought us products from Ziploc bags and saran wrap, will first combine as DowDuPont, then divide into three independent, publicly traded companies dedicated to agriculture, material science, and specialty products. Managed by activist investor Dan Loeb, hedge fund Third Point LLC has pressured Dow to split its specialty chemical and petrochemical businesses.

With Dow’s plan to merge with rival DuPont, anxiety is rising for Midland, Michigan’s 42,000 residents over the future of its largest employer and longtime supporter. About 600 miles away in Wilmington, Delaware, home to DuPont since 1802, locals are evaluating similar questions over a deal that would create an agriculture and chemical giant currently valued at about $120 billion (before splitting it up into three parts).

“Our world’s being rocked. To say there’s a lot of concern is an understatement,” said Gary Skory, director of the Midland County Historical Society. Big deals in older, simpler industries typically spell doom for the other companies in that space.

The DowDuPont deal may signal that these two giants believe oil and commodity prices are going to stay under pressure for the foreseeable future, which could drive them to attempt to break up their businesses, said an email from Axiom Capital’s Gordon Johnson. While both of these companies use petroleum to create chemicals and plastics, the cheaper input costs are apparently not enough to outweigh reduction for all commodities. A slowing Chinese economy doesn’t help, either.

Charles Kane, senior Lecturer in International Finance and Entrepreneurial Studies at MIT Sloan School of Management, isn’t too fond of the deal:

“You can take companies that are hundreds of years old, as these two companies are, and you can slice-and-dice an R&D budget to get near-term earnings easily. You mortgage away the future. The short-term gains are what the activists are after,” he said.

Others are feeling optimistic about the DowDuPont deal.

Tim Nash, a local economist and Northwood University professor, called the plan “unique” and believes having the two companies under one umbrella makes perfect sense. “The new Dow Chemical after the split, I think, will be at least as big in sales, if not larger, than the old Dow Chemical. It will be as big, if not bigger, with Dow Corning included in there. It just adds a lot of additional opportunities and certainly compliments and supplements all the good things Dow is doing,” Nash said.

“What’s encouraging is that these companies are focusing on the products that bring value and that have the best potential to create a sustainable business for the long term. We need to remember that Dow is already one of the largest chemical companies in the world and is focused on global challenges. They are a company of innovators and solution providers and no matter how large they get, it still comes back to its people, its talented scientists and its expertise,” said JoAnn Crary, president of Saginaw Future.

The merged DowDuPont will have dual headquarters in Midland and Wilmington.

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