(CN) - Dow and DuPont said Friday they will merge to form the world's second-largest chemical company, with an estimated market value of $130 billion, then split into three.
Calling the deal an "all-stock merger of equals" the companies said the new business will be named DowDuPont.
"It is the intention of both companies' boards of directors that, following the merger, DowDuPont would pursue a tax-free separation into three independent, publicly traded companies," Dow said in a statement.
The spun-off firms will focus on agriculture, materials science and specialty products.
Dow shareholders would receive one share in the new company for each of their shares, while DuPont shareholders would get 1.282, giving shareholders of each company roughly a 50 percent stake.
The board would have 16 members, eight from each company.
The deal must be approved by federal regulators and is sure to face scrutiny, and shareholder class actions.
Dow employs 53,000 people in 160 countries, while DuPont has around 64,000 workers. The two companies reported combined revenue of about $92 billion last year.
BASF, of Germany, is the world's largest chemical company. It has 113,000 employees in 200 countries, 53,200 of them in Germany, according to publicly available information. It reported 81 billion euros in revenue in 2014.
Neither Dow nor DuPont mentioned layoffs in their announcements, but DuPont said the deal will result in "approximately $650 million of employee separation costs" and that "approximately 10 percent of DuPont's global workforce will be impacted."
Together, the companies have more than three centuries of experience in the industrial chemical industry. DuPont started as a gunpowder mill in 1802, while Dow was founded in 1897 and got its start selling bleach.
Dow and DuPont agreed to share leadership of the new company. Dow's chairman and CEO Andrew Liveres will become executive chairman of its board and DuPont's chief executive Andrew Breen will be CEO.
The companies have far from admirable environmental and safety records. The U.S. Environmental Protection Agency says Dow is liable for 96 of the country's Superfund toxic waste sites.
The U.S. Occupational Safety and Health Administration fined DuPont $273,000 in July for safety violations at its plant in La Porte, Texas. Four workers were killed in November 2014 by a toxic chemical release. An investigation by the U.S. Chemical Safety Board found DuPont at fault for flawed safety procedures.
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