KELLY MCEVERS, HOST:
Two giants of American industry say they are merging in a deal worth $130 billion. NPR's Jim Zarroli reports that Dow Chemical and DuPont have both been under intense pressure from shareholders to do something about sagging profits.
JIM ZARROLI, BYLINE: The new company will be called Dow DuPont. Within the next couple of years, it will be broken up into three separate companies for agriculture, material science and specialty products. Officials are hoping the new companies will be leaner and more focused. Emilie Feldman is an assistant professor of management at the Wharton School.
EMILIE FELDMAN: Right now you have these big, sprawling companies that are doing lots of different things not very well, and so they're going to slim themselves down and each do things well that they can focus on.
ZARROLI: Dow and DuPont are both venerable names in American industry. Dow introduced Saran Wrap and Ziploc Bags. DuPont invented Teflon for cookware and Kevlar for bulletproof vests. But the companies have been hard-hit by the slowdown in global growth and the drop in commodity prices. Both have fallen under intense pressure from shareholder activists who wanted to see them broken up and reorganized. DuPont CEO Edward Breen, who will keep the same title in the new company, says the deal announced today will be much better for shareholders.
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EDWARD BREEN: I mean, we looked at every possibility, analyzed every one financially. There's nothing that financially compares to the value creation for a DuPont shareholder.
ZARROLI: Breen spoke on CNBC. Like all big mergers, this one will have to be approved by regulators who will decide whether it hurts competition. Company officials say they're not expecting a lot of problems. While Dow and DuPont are the two biggest U.S. chemical companies, they are in a global market and face plenty of foreign competition. They also don't tend to compete in many of their biggest product lines. Still, federal regulators have been more skeptical of big mergers lately, and this one is likely to face a lot of scrutiny. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.
